The board of directors might decide it is in the best interest of shareholders to sell the corporation to new owners. In theory, a change in control only makes sense when the value of the firm to new owners, minus transaction costs, is greater than the value of the firm to current owners.
This Quick Guide examines the market for corporate control.
It answers the questions:
• Why do companies merge?
• Do mergers improve performance?
• Who gets the value in a merger?
• How do companies protect themselves from hostile bids?
• Do these protections help shareholders?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: email@example.com
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.