Market for Corporate Control

The market for corporate control — encompassing takeovers, mergers, and acquisitions — serves as an external governance mechanism, providing a check on management performance.

If a company is underperforming, it becomes a potential takeover target, creating incentives for management to maximise shareholder value. Anti-takeover defences (poison pills, staggered boards, dual-class share structures) can entrench management and reduce accountability. The G20/OECD Principles state that anti-takeover devices should not be used to shield management from accountability. Mandatory bid rules (requiring acquirers to offer the same price to all shareholders upon crossing a threshold) protect minority shareholders in takeover situations.

Further Reading

• G20/OECD Principles of Corporate Governance
• ESRS

Key Resources

• European Takeover Directive

Related Topics

• Board Responsibilities
• Disclosure & Transparency
• Sustainability & Resilience