Journal of Political Economy Vol. 96 No. 1 1988
Takeover Threats and Managerial Myopia
open access
Abstract
This paper examines the familiar argument that takeover pressure can be damaging because i t leads managers to sacrifice long-term interests in order to boost c urrent profits. If stockholders are imperfectly informed, temporarily low earnings may cause the stock to become undervalued, increasing t he likelihood of a takeover at an unfavorable price; hence the manage rial concern with current bottom line. The magnitude of the problem d epends on a variety of factors, including the attitudes and beliefs o f shareholders, the extent to which corporate raiders have inside inf ormation, and the degree to which managers are concerned with retaini ng control of their firms.
- DOI
- 10.1086/261524
- Volume
- 96
- Issue
- 1
- Pages
- 61-80
- Language
- en
- Sources
- crossref openalex