This paper reviews the literature on the association between corporate governance and takeovers. It approaches takeovers as an effective external corporate governance mechanism. The main conclusions to be drawn is that although the mere threat of an active market for corporate control may be positively correlated with good internal governance, takeovers will always take place independently of good internal corporate governance by targets and that managerial ownership is crucial for a favorable shareholder outcome in a takeover event. We believe future research on corporate boards, cross-national takeovers and managers of bidding firms would be of great interest.
- Corporate Governance
- Mergers and Acquisitions