Mergers, takeovers, and a property ethic

✍ Scribed by Vincent Norcia

• Book ID: 104747638
• Publisher: Springer
• Year: 1988
• Tongue: English
• Weight: 755 KB
• Volume: 7
• Category: Article
• ISSN: 0167-4544
• DOI: 10.1007/bf00382004

✦ Synopsis

The recent takeover and merger trend cries out for ethical evaluation. This essay proposes a model for evaluating them in terms of their impact on a firm's immediate stakeholders: investors, owners, management and employees. Since mergers and takeovers are 'Transfers of Ownership of Firms' (TOFs) they entail a property ethic of ownership, control, securing stakeholder interests, and defining which stakeholders should exercise these rights. I use the model to evaluate two fictional cases, a friendly merger and a hostile takeover. The results show that neither TOF serves all interests equitably. Since the control structure of the private firm is legitimized by its interest structure, I reason that both should be reformed. Both rest on a broader economic rationale; but it is controverted. Accordingly, the economic and ethical evaluation of TOFs, I conclude, both entail the democratic reform of the control structure of the firm.

"A corporation represents far more than its current stock price; it embodies obligations to employees, customers, suppliers and communities.