Free Stanford GSB Corporate Governance educational material available on “The Market for Corporate Control”Wednesday, May 18th, 2011
Market for Corporate Control (Powerpoint Presentation)
Authored by Professor David F. Larcker and BrianTayan, Researcher, GSB Corporate Governance Research Program/MBA ’03.
Overview: A well-functioning governance system consists of more than just the board of directors and the external auditor. It includes all disciplining mechanisms—legal, regulatory, and market driven—that influence management to act in the interest of shareholders.
-Labor market. Failure leads to CEO termination.
-Capital market. Failure leads to higher cost of capital.
-Regulatory environment. Violations lead to litigation.
Similarly, the “market for corporate control” puts pressure on the CEO to perform, or risk sale of company to new owners.
The entire series of presentations, to date, can be found here.