The market for corporate control in Europe

With the globalisation and growing complexity of the economy, the market for corporate control is becoming increasingly important, since it examines the relationship between capital markets and the management of corporations – a topic closely related to corporate governance and corporate finance. In the context of the market for corporate control, hostile takeovers are considered a major instrument to discipline existing management, because they give shareholders the power to gain control of a corporation and subsequently appoint a different management team. In this respect, shareholders can use hostile takeovers to protect their interests in case they disagree with the actions of the management. This book examines the market for corporate control and supports the underlying theory with an empirical study of hostile takeovers in Europe. The goal of the research is to analyse the role of hostile takeovers and the impact they have on strategic management. For this purpose a conceptual model was developed which attempts to assess the effectiveness of hostile takeovers as a control mechanism for shareholders. The model is consistently applied to public hostile takeover bids that were launched in Europe from 1997 to 2001, a time period that was characterized by hostile takeover activity. In addition, the empirical study is complemented by selected case studies.