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Why Do Corporations Merge And Why Should Law Care?, Chris Sagers
Why Do Corporations Merge And Why Should Law Care?, Chris Sagers
University of Michigan Journal of Law Reform
Mergers and acquisitions are extraordinarily prevalent in the United States, generating massive expenditures every year. However, a serious empirical puzzle lies at the heart of all that activity. That empirical phenomenon’s most remarkable feature by far is that even though it is well established in an extensive literature and implies far-reaching policy consequences, American law ignores it entirely.
Generations of researchers have failed to find evidence that merger and acquisition activity generates any lasting benefits for the combining firms’ owners or anyone else. No one seriously doubts that efficiencies of scale or technological integration are real or that acquisitions sometimes …
Beyond The Business Judgment Rule: Protecting Bidder Firm Shareholders From Value-Reducing Acquisitions, Ryan Houseal
Beyond The Business Judgment Rule: Protecting Bidder Firm Shareholders From Value-Reducing Acquisitions, Ryan Houseal
University of Michigan Journal of Law Reform
During the takeover transactions of the 1980s, bidder firms paid target firm shareholders average premiums of approximately 50% for their shares. Did the sizable premiums paid to target firm shareholders during the 1980s reflect post-takeover improvement in the target's performance? Or were the premiums a result of the mismanagement of the bidder firms' assets?
The answer will help determine whether additional legal mechanisms should be established to protect bidder firm shareholders from the threat of management's consummation of value reducing acquisitions. Accordingly, this Note examines various studies which attempt to identify the source of the premiums paid to target firm …