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The Nature of Discipline by Corporate Takeovers
Author(s) -
Kini Omesh,
Kracaw William,
Mian Shehzad
Publication year - 2004
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.2004.00671.x
Subject(s) - market for corporate control , corporate governance , discipline , market discipline , accounting , sample (material) , period (music) , business , control (management) , economics , financial system , political science , law , shareholder , finance , management , chemistry , physics , chromatography , acoustics
This paper provides a comprehensive examination of the disciplinary role of the corporate takeover market using a sample of U.S. target firms over the period 1979 to 1998. The time period spanned allows a broader study not only of the disciplinary role of the takeover market in general, but also of the interaction between the takeover market and alternative governance mechanisms during the 1980s and 1990s. Overall, our evidence is consistent with the view of the corporate takeover market as a “court of last resort,” that is, it is an external source of discipline that intercedes when internal control mechanisms are relatively weak or ineffective.