To read this content please select one of the options below:

Battles for Control: An Overview of Proxy Contests

G.D. Hancock (Assistant Professor of Finance, Finance Area, University of Missouri‐St. Louis, 8001 Natural Bridge Road, St. Louis, MO 63121–4499)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 July 1992

118

Abstract

This paper reviews the theoretical and empirical contributions to the proxy contest literature. The theoretical work, to date, suggests that (1) the use of the proxy contest as a method of taking over a corporation depends on its cost relative to the tender offer; (2) the security voting structure and the debt/equity ratio influence the outcome of the proxy contest; and, (3) the value of a proxy contest can be estimated using the principles of option pricing theory. A review of empirical research indicates that (1) firms which are inefficiently managed are more likely to become the target of a proxy fight; (2) wealth gains accrue to shareholders of contested firms during the contest period; and, (3) incumbent management is more likely to succeed in a proxy fight but not necessarily ‘win’.

Citation

Hancock, G.D. (1992), "Battles for Control: An Overview of Proxy Contests", Managerial Finance, Vol. 18 No. 7/8, pp. 59-76. https://doi.org/10.1108/eb013703

Publisher

:

MCB UP Ltd

Copyright © 1992, MCB UP Limited

Related articles