Corporate entrepreneurship: Growth through acquisitions with a focus on target firm TMT retention
Date of this Version
From the market for corporate control (MCC) perspective, the key role of takeovers is to correct the effects of managers¿ past behavior that has caused the firm to under-perform (Jensen, 1986). Such corrections occur when alternative management teams compete successfully for the right to control the assets of undervalued corporations (Jensen and Ruback, 1983). This literature further suggests that getting rid of the previous management should improve the performance of the acquired firm.
This document has been peer reviewed.