Who writes the rules for hostile takeovers, and why?
Author InfoJohn Armour David A. Skeel, Jr. Abstract Hostile takeovers are commonly thought to play a key role in rendering managers accountable to dispersed shareholders in the “Anglo-American” system of corporate governance. Yet surprisingly little attention has been paid to the very significant differences in takeover regulation between the two most prominent jurisdictions. In the UK, defensive tactics by target managers are prohibited, whereas Delaware law gives US managers a good deal of room to maneuver. Existing accounts of this difference focus on alleged pathologies in competitive federalism in the US. In contrast, we focus on the “supply-side” of rule production, by examining the evolution of the two regimes from a public choice perspective. We suggest that the content of the rules has been crucially influenced by differences in the mode of regulation. In the UK, self-regulation of takeovers has led to a regime largely driven by the interests of institutional investors, wherea
