Corporate Governance and Merger Activity in the United States: Making Sense of the 1980s and 1990s

This paper describes and considers explanations for changes in corporate governance and merger activity in the United States since 1980. Corporate governance in the 1980s was dominated by intense merger activity distinguished by the prevalence of leveraged buyouts (LBOs) and hostility. After a brief...

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Bibliographic Details
Published in:The Journal of economic perspectives 2001-04, Vol.15 (2), p.121-144
Main Authors: Holmstrom, Bengt, Kaplan, Steven N.
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Boards of directors
Borrowing
Business management
Business structures
Capital management
Capital markets
Competition
Corporate governance
Corporate objectives
Corporations
Decades
Economic concentration
Equity
Hostility
Institutional investments
Investors
Junk bonds
LBO
Leveraged buyouts
Mergers
Productivity growth
Securities markets
Shareholder value
Shareholders
Stockholders
Symposium: Changes in Corporate Structure
Take-overs
Trends
U.S.A
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Summary:This paper describes and considers explanations for changes in corporate governance and merger activity in the United States since 1980. Corporate governance in the 1980s was dominated by intense merger activity distinguished by the prevalence of leveraged buyouts (LBOs) and hostility. After a brief decline in the early 1990s, substantial merger activity resumed in the second half of the decade, while LBOs and hostility did not. Instead, internal corporate governance mechanisms appear to have played a larger role in the 1990s. We conclude by considering whether these changes and the movement toward shareholder value are likely to be permanent.
ISSN:0895-3309
1944-7965
DOI:10.1257/jep.15.2.121