Donald Palmer of University of California, Davis reviews, “The Fracturing of the American Corporate Elite” by Mark S. Mizruchi. The Econlit abstract of this book begins: “Examines the rise and fall of the American corporate elite between 1945 and the present and considers the role of this decline in the current crises of American democracy and economics. Discusses the rise of the American corporate elite; the state and the economy; labor as uneasy partner; the banks as mediators; the breakdown of the postwar consensus; winning the war but losing the battle—the fragmentation of the American corporate elite; the aftermath; and the ineffectual elite. Mizruchi is Barger Family Professor of Organizational Studies and Professor of Sociology and Business Administration at the University of Michigan.”

We estimate continuous-time event-history models of the acquisition of conglomerate vs. non-conglomerate and predatory vs. friendly acquisitions among the 1962 Fortune 500 between January, 1963, and December, 1968. Our analysis of predatory acquisitions reveals that there were strong disciplinary motivations for these acquisitions in the 1960s. Q ratios were, by a large margin, the most important determinant of predatory acquisition likelihood. Surprisingly, however, corporate boards appear to have provided little alternative to predatory acquisition as a monitoring mechanism during this period. Friendly acquisitions, on the other hand, were concentrated among firms with low price-earnings ratios and high return on equity, suggestive of the earnings manipulation story often associated with conglomerate acquisitions. Our analysis of conglomerate acquisitions reveals that there were strong disciplinary motivations for conglomerate acquisitions during this period. Conglomerate targets had low Q ratios and were as likely as non-conglomerate targets to be acquired in a predatory fashion. We find no evidence that conglomerate acquisitions were motivated by a desire to improve earnings-per-share numbers, as some have maintained. In addition, regardless of type or tenor, we find managerial ownership, firm size, and industrial organization motivations for acquisition are consistently important determinants of acquisition likelihood.