ABSTRACT
HOSTILE TAKEOVERS ARE CONTROVERSIAL. To some, takeovers are an important method of correcting managerial failure. Rappaport (1590), for example, believes that the recent wave of takeover activity ‘has changed the attitudes and practices of U.S. managers’. He argues (p. 100) that ‘it represents the most effective check on management autonomy ever devised. And it is breathing new life into the public corporation’. Grossman and Hart (1980, p. 329) associate this discipline with hostile takeovers: ‘. . . since the threat of raids encourages good management and raids only occur in events where the company is worth more to the raider than it is currently worth, there is no reason on efficiency grounds for society to restrict raids’.
