Grossman and Hart
The RAND Corporation
Takeover Bids, The Free-Rider Problem, and the Theory of the Corporation Author(s): Sanford J. Grossman and Oliver D. Hart Source: The Bell Journal of Economics, Vol. 11, No. 1 (Spring, 1980), pp. 42-64 Published by: The RAND Corporation Stable URL: http://www.jstor.org/stable/3003400 . Accessed: 11/05/2011 20:16
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Takeover bids, the free-riderproblem, and the theory of the corporation
Sanford J. Grossman* and Oliver D. Hart**
It is commonly thought that a widely held corporation that is not being run in the interest of its shareholders will be vulnerable to a takeover bid. We show that this is false, since shareholders can free ride on the raider 's improvement of the corporation, thereby
Takeover Bids, The Free-Rider Problem, and the Theory of the Corporation Author(s): Sanford J. Grossman and Oliver D. Hart Source: The Bell Journal of Economics, Vol. 11, No. 1 (Spring, 1980), pp. 42-64 Published by: The RAND Corporation Stable URL: http://www.jstor.org/stable/3003400 . Accessed: 11/05/2011 20:16
Your use of the JSTOR archive indicates your acceptance of JSTOR 's Terms and Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR 's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at . http://www.jstor.org/action/showPublisher?publisherCode=rand. . Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
The RAND Corporation is collaborating with JSTOR to digitize, preserve and extend access to The Bell Journal of Economics.
http://www.jstor.org
Takeover bids, the free-riderproblem, and the theory of the corporation
Sanford J. Grossman* and Oliver D. Hart**
It is commonly thought that a widely held corporation that is not being run in the interest of its shareholders will be vulnerable to a takeover bid. We show that this is false, since shareholders can free ride on the raider 's improvement of the corporation, thereby
References: (April 1965), pp. 110-120. MARRIS, R. TheEconomicTheory ManagerialCapitalism.Illinois:Free Press of Glencoe, 1964. of J.A