Efficient and Inefficient Sales of Corporate Control

Lucian Bebchuk ()

No 4788, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a framework for analyzing transactions that transfer a company's controlling block from an existing controller to a new controller. This framework is used to compare the market rule, which is followed in the United States, with the equal opportunity rule, which prevails in some other countries. The market rule is superior to the equal opportunity rule in facilitating efficient transfers of control but inferior to it in discouraging inefficient transfers. Conditions under which one of the two rules is overall superior are identified; for example, the market rule is superior if existing and new controllers draw their characteristics from the same distributions. Finally, the rules' effects on surplus division are analyzed and this examination reveals a rationale for mandatory rules.

Date: 1994-07
Note: LE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (77)

Published as The Quarterly Journal of Economics, vol. 109, no. 4, pp. 957-993,(November 1994)

Downloads: (external link)
http://www.nber.org/papers/w4788.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:4788

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w4788

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().