Managers, Workers and Corporate Control
38 Pages Posted: 7 Jan 2003
There are 2 versions of this paper
Managers, Workers, and Corporate Control
Date Written: November 2002
Abstract
If the private benefits of control are high and management owns a small equity stake, managers and workers are natural allies. Two forces are at play. First, managers can transform employees into a 'poison pill' through generous long-term labour contracts and thereby reduce the firm's attractiveness to a raider. Second, employees act as 'white squires' for the incumbent managers: to protect their high wages, they resist hostile takeovers, by refusing to sell their shares to the raider or by lobbying against the takeover. The model is consistent with available empirical findings, and also yields new predictions.
Keywords: Corporate control, private benefits, takeovers, ESOPs, employment protection
JEL Classification: G34, K22, K42
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Political Economy of Corporate Governance
By Marco Pagano and Paolo F. Volpin
-
A Theory of Path Dependence in Corporate Ownership and Governance
By Lucian A. Bebchuk and Mark J. Roe
-
Is There Discretion in Wage Setting? a Test Using Takeover Legislation
-
Managers, Workers, and Corporate Control
By Paolo F. Volpin and Marco Pagano
-
Do Union Wealth Concessions Explain Takeover Premiums? The Evidence on Contract Wages
-
Class Struggle Inside the Firm: A Study of German Codetermination
By Gary B. Gorton and Frank A. Schmid
-
Lifetime Employment: Labor Peace and the Evolution of Japanese Corporate Governance
By Ronald J. Gilson and Mark J. Roe
-
Corporate Contracting Around Defective Regulations: The Daimler-Chrysler Case