The Evolution of the Market for Corporate Control

Paul Voss, Samuel Lee and Mike Burkart
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Paul Voss: HEC Paris - Finance Department
Samuel Lee: Santa Clara University - Leavey School of Business; European Corporate Governance Institute (ECGI); Swedish House of Finance
Mike Burkart: Swedish House of Finance; London School of Economics and Political Science, Department of Finance; Finance Theory Group (FTG); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

No 1606, HEC Research Papers Series from HEC Paris

Abstract: We consider an informed large shareholder who can choose between making a takeover bid herself and initiating a sale to another acquirer. Such takeover activism complements direct takeovers because the very choice mitigates the asymmetric information problem, thereby improving efficiency. As more investors enter the market for corporate control, takeover activism increasingly replaces direct takeovers as the prevailing mode of disciplinary control change---matching the evolution in practice. Our model shows how such an evolution, characterized by a symbiotic relationship between investor activism and private equity, arises to overcome asymmetric information and collective action problems through intermediated transactions

Keywords: Tender offers; takeover activism; free-rider problem; asymmetric information; market for corporate control (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2024-02-12, Revised 2025-12-29
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1606

DOI: 10.2139/ssrn.4709037

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