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| Governance and the Market for Corporate Control By: John L. Teall Abington, UK: Routledge Publishers , 2007 ISBN: 0-415-39786-3 288 pages, Hard Cover HD2741.T43 2006 338.6 - dc22 |
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| ABOUT THE BOOK
From The Publisher Governance and the Market for Corporate Control is a textbook for use on business courses dealing with mergers, acquisitions, governance restructuring and corporate control.Three key features distinguish this book from competing texts. First, following up on recent developments in the corporate arena, it places a heavy emphasis on managerial compensation, incentives and corporate performance. Second, its conciseness allows for flexibility of use. Third, its coverage is broad and examines many topics including:
Reviews 'This lucid and comprehensive text provides an in depth view and analysis of the many facets of corporate governance and its importance for business efficiency and wealth distribution in the U.S., Europe and the rest of the world. It is based on good theory, yet its contents have great practical relevance for managers, board members, legislators and any one with a stake in a firm. Corporate Governance and the Market for Corporate Control is an ideal textbook for business and economics students since it presents a rich and captivating assortment of applications, examples and short case studies carefully illustrating the most important and most relevant issues affecting the governance and control of business firms around the world.' Clas Wihlborg, Professor of Finance and Director, Center for Law, Economics and Financial Institutions, Copenhagen Business School 'Corporate Governance and the Market for Corporate Control offers an engaging and comprehensive overview of corporate governance in the modern global economy. This timely exposition is highly readable and includes intuitive discussions of theory and modeling along with numerous case examples. The book is well written and highly recommended for professional and popular readership as well as for university classroom use, both at MBA and undergraduate levels. ' Kose John Charles William Gerstenberg Professor of Banking and Finance Leonard N. Stern School of Business Administration, New York University 'Dr. Teall has done an admirable job distilling the essential concepts, problems and theories of corporate control into a single concise and accessible volume. Topics in this well organized text range from the theory of the firm and corporate acquisitions to power, voting, abuses and excesses of managerial entrenchment and compensation policy. Theories and models are explained clearly in this book, as are empirical and computational methodologies. Discussions on the economic impacts of M&A activity, compensation policy and organizational structures are fascinating and important reading material for business, law and economics students at all levels.' Iftekhar Hasan, Cary L. Wellington Professor of Finance, Lally School of Management and Technology, Rensselaer Polytechnic Institute |
Preface
Ι. An Introduction to the Market for Corporate Control
A. An Introduction to the Theory of the Firm
B. What is the Market for Corporate Control?
C. Corporate Objectives and the Agency Problem
D. Jensen, Meckling, Monitoring and Bonding
E. Corporate Ownership Structure
F. Alternative Governance Systems
Japanese Governance, Ownership Structure and the Keiretsu
The Economic Cooperative
Discussion Questions
Appendix 1.A: The Prisoner’s Dilemma
II. Corporate Boards, Power and Voting
A. The Corporate Charter and Bylaws
B. Boards and Board Structure
The German Two-Tier Board Structure
Board Committees
C. Voting, Proxies and Proxy Raids
D. Power Indices
E. Valuing Votes
F. Cumulative vs. Majority Voting
G. Share Classes and Recapitalizations
Synthesizing Votes
Sotheby’s and Single Class Unification
Exercises
Exercise Solutions
III. Managerial Compensation, Shareholdings and Performance
A. Summary Statistics
B. The Structure of CEO Compensation
Valuing Managerial Stock Options
Unwinding Equity Incentives
Deferred Compensation
C. Determinants of Managerial Compensation
Non-CEO Executive Compensation
D. The Board and Compensation Decisions
E. Managerial Compensation and Performance
F. Managerial Shareholdings and Entrenchment
Death of the CEO
G. Is Management Compensation Really Excessive?
Exercises
Exercise Solutions
Appendix 3.A: A Primer on Option Pricing
Put-Call Parity
Appendix 3.B: Adjusting Managerial Stock Options for Dilution
IV. Corporate Takeovers
A. Motives for Takeovers
Value Creation Through Improved Operations or Enhanced Revenues
Wealth Transfers
Managerialism
B. The Co-Insurance Effect
C. Cross-Border Takeovers: Motivations and Complications
China Construction Bank: Strategic Alliance with Bank of America
D. Forms of Takeovers
E. History of Takeovers
F. The Merger Wave in Europe
Example: Takeovers in the European Banking Industry
Example: Effects of the European Bank Merger Wave on Local Banks
G. The Managerial Role in the Takeover
Takeover Defenses
H. Law and Regulation of Takeover Activity
Antitrust Laws
European Antitrust Law
Securities Law
State Regulation
Industry-Specific Regulation: The U.S. Banking Industry
I. Accounting and Taxation for Takeover Activity
Exercises
Exercise Solutions
Appendix 4.A: 1997 Merger Guidelines
Purpose, Underlying Policy Assumptions and Overview
Market Definition, Measurement and Concentration
The Potential Adverse Competitive Effects of Mergers
Entry Analysis
Efficiencies
Appendix B: Mergers Exceeding $13 Billion Through 2003
V. Takeover Valuation
A. Introduction
B. The Comparables Approach
C. The NPV Approaches
Takeover Valuation: Illustration
D. Multi-Stage Growth Models
Application: The 2004 Vodafone Takeover Bid for AT&T Wireless
E. Valuing the Cross-Border Takeover
Cross-Border Takeover: Illustration
F. Setting the Discount Rate
Cost of Capital: Illustration
G. The Certainty Equivalence Model and Real Options
Example: The Takeover and New Product Development
H. Real Options Analysis and Takeovers
Real Options Analysis: Asset Abandonment Option Example
Real Options Analysis: The Coinsurance Effect
Takeovers and Coinsurance Options Positions: An Example
I. Defensive Acquisitions and Bidding
Exercises
Exercise Solutions
VI. Going Private and Other Control Transactions
A. Leveraged Buyouts (LBOs)
B. Management Buyouts (MBOs)
Example: MBO of Aescia from German Chemical Giant BASF
C. Employee Stock Ownership Plans (ESOPs)
D. Master Limited Partnerships (MLPs)
E. Spin Offs, Asset Divestitures and Tracking Stock
VII. Event Study Methodology
A. Event Studies
B. Normal and Abnormal Returns
Example: Event Study Methodology
References
Exercises
Exercise Solutions
Appendix 7.A: A Brief Review of Elementary Statistics
Mean, Variance and Standard Deviation
Co-Movement Statistics
A Brief Review of Hypothesis Testing
Hypothesis Testing: Two Populations
Introduction to the Simple OLS Regression
VIII. Empirical Evidence on Takeover Activity
A. Takeover Returns: A Summary
B. Post-Merger Firm Performance: Combined Firm Results
C. Target Firm Returns
D. Acquiring Firm Returns
E. Merger Effects on Bonds
F. Going Private, Divestiture and ESOP Transactions
G. Managerial Motives for Mergers
H. Takeover Legislation and Regulation
I. Proxy Contests
IX. Corporate Governance Failures
A. Effective Corporate Governance
B. Corporate Kleptocracy and Cooking the Books in America
C. Rotten to the Core and Asleep at the Wheel
Example: The Parmalat Meltdown
Example: The Skandia Scandal
D. Cleaning up the Mess
Glossary
Endnotes
References
Index