
Corporate Governance and the Market for Corporate Control
Corporate governance focuses on balancing the interests of shareholders and other stakeholders. Stakeholders are those who have a claim to a corporation's resources and include investors, employees, vendors, communities, and society-at-large. Boards are under unrelenting pressure to meet quarterly earnings targets and are a target for plaintiffs' attorneys after any hiccup in stock price or profit. Successful governance reflects fair business practices and robust risk management systems. Mergers and Acquisitions In theory, the market for corporate control can serve as a powerful force to correct managerial inefficiencies and poor governance practices. In practice, however, it can also abet or encourage these practices. This Chapter marshals aggregate evidence on the number and value of acquisitions that took place during the 1980s and 1990s to assess whether this important external mechanism has…