European Business Schools Librarian's Group
HEC Research Papers Series,
HEC Paris
No 1606: The Evolution of the Market for Corporate Control
Paul Voss, Samuel Lee and Mike Burkart
Additional contact information
Paul Voss: HEC Paris - Finance Department
Samuel Lee: Santa Clara University - Leavey School of Business; European Corporate Governance Institute (ECGI); Swedish House of Finance
Mike Burkart: Swedish House of Finance; London School of Economics and Political Science, Department of Finance; Finance Theory Group (FTG); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Abstract: We consider an informed large shareholder who can choose between making a takeover bid herself and initiating a sale to another acquirer. Such takeover activism complements direct takeovers because the very choice mitigates the asymmetric information problem, thereby improving efficiency. As more investors enter the market for corporate control, takeover activism increasingly replaces direct takeovers as the prevailing mode of disciplinary control change---matching the evolution in practice. Our model shows how such an evolution, characterized by a symbiotic relationship between investor activism and private equity, arises to overcome asymmetric information and collective action problems through intermediated transactions
Keywords: Tender offers; takeover activism; free-rider problem; asymmetric information; market for corporate control
JEL-codes: G34
72 pages, First version: February 12, 2024. Revised: December 29, 2025.
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