ABSTRACT
One main characteristic of modern economy is its ability to create free extended exchanges in products and services as almost the only means of making transactions. The invention of exchange markets has undeniably revolutionized the world of finance, by ensuring it much liquidity and unexpected fluidity. The recent development of market for corporate control is yet a further step that constitutes the latest historical development in the field. As a particular and distinct type of capital market, the market for corporate control allows transactions on corporate securities to be made on so huge a volume that they usually provoke shifts in corporate control. This makes corporations themselves become commodities susceptible of being bought and sold. This consequently provides an efficient incentive for improved corporate governance and enhanced management efficiency. Takeovers or their prospect, as corporate control transactions, are assumed to benefit shareholders and the corporation. Indeed, “evidence indicates that corporate takeovers generate positive gains, that target firm shareholders benefit, and that bidding firm shareholders do not lose” (Ruback et al., 1983). They may actually constitute a strong external corporate governance mechanism that has a multiple effect on corporate governance by acting as counseling, remunerating, and disciplinary mechanism. But the financial market seems to have lost part of its gloss these days, thanks to many deficiencies discovered and the numerous frauds orchestrated.
