Political Science 2211E Lecture Notes - Corporate Raid, Takeover, High-Yield Debt
15 Dec 2013
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Corporate governance: the impact of institutional investors on corporate governance, the 1980s takeover wave, the 1990s shareholder activism wave. Nature of relationship between owners and managers. Technical issues such as board organization, management pay, company charter, etc. Reality was that modern corporation was characterized by. Shareholders had little influence over management for 3 reasons: unconnected shareholders don"t organize votes, own shares in many companies- therefore exit rather, compliant boards rubber-stamp ceo than voice . Mutual funds and pension funds as key financial actors. Firms now owned by a smaller number of large investors. Fund managers under pressure to boost fund in short-term. Fund managers pressure ceos to quickly boost stock price. Short-term pressures on ceos: corporate raider" attempts to accumulate a controlling block of a firm"s shares against the wishes of the firm"s management, raider offers to pay shareholders a premium" for their shares. Ceos had to listen to large shareholders. Many junk bonds together could be less risky.
