A mandatory bid rule for Australia: an idea whose time has come

Mayanja, James (2004) A mandatory bid rule for Australia: an idea whose time has come. Australian Journal of Corporate Law, 16 (3). pp. 205-227. ISSN 1037-4124

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Abstract

In devising rules governing the conduct of takeover transactions, policy makers would serve the interests of investors and the economic order of society generally better by adopting regulations that maximise shareholder and social welfare. A mandatory bid rule can assist to achieve this objective. By significantly enhancing the chances of a takeover succeeding, that rule potentially encourages bidders to attempt more hostile acquisitions. An increase in search for potential takeover targets is likely to create some insecurity among directors and induce them to perform to their best level. Further, as takeovers facilitate the re-allocation of scarce societal resources to the parties to whom they have the highest valued uses, greater efficiency in the allocation of resources within industries is likely to be achieved as the incidence of hostile takeover transactions increases. Also, given that hostile takeovers are invariably made at a premium, an increase in that activity is likely to enhance shareholder wealth. These are matters of significant public importance. For this reason, it is advisable to reform the law governing takeover activity to introduce a mandatory bid rule in Australia.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Deposited with permission of publisher.
Depositing User: Dr James Mayanja
Faculty / Department / School: Historic - Faculty of Business - Department of Law
Date Deposited: 11 Oct 2007 01:01
Last Modified: 04 Oct 2013 04:37
Uncontrolled Keywords: hostile takeovers; market for corporate control; takeover regulation; mandatory bid rule
Fields of Research (FOR2008): 18 Law and Legal Studies > 1801 Law > 180109 Corporations and Associations Law
22 Philosophy and Religious Studies > 2201 Applied Ethics > 220102 Business Ethics
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150303 Corporate Governance and Stakeholder Engagement
Socio-Economic Objective (SEO2008): C Society > 94 Law, Politics and Community Services > 9404 Justice and the Law > 940405 Law Reform
URI: http://eprints.usq.edu.au/id/eprint/2293

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