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  3. Journal of Economic Perspectives
  4. Winter 1988
  5. Takeovers: Their Causes and Consequences

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Takeovers: Their Causes and Consequences

  • Michael C. Jensen
Journal of Economic Perspectives
vol. 2, no. 1, Winter 1988
(pp. 21–48)
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Abstract

Economists have accumulated considerable evidence and knowledge on the effects of the takeover market. Here, I focus on current aspects of the controversy. My assessment is that the market for corporate control is creating large benefits for shareholders and for the economy as a whole by loosening control over vast amounts of resources and enabling them to move more quickly to their highest-valued use. This is a healthy market in operation, on both the takeover side and the divestiture side, and it is playing an important role in helping the American economy adjust to major changes in competition and regulation of the past decade.

Citation

Jensen, Michael C. 1988. "Takeovers: Their Causes and Consequences." Journal of Economic Perspectives 2 (1): 21–48. DOI: 10.1257/jep.2.1.21

JEL Classification

  • G14 Information and Market Efficiency; Event Studies; Insider Trading
  • G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
  • G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
  • G35 Payout Policy
  • G38 Corporate Finance and Governance: Government Policy and Regulation
  • K22 Business and Securities Law