TY  - JOUR
AU  - Bebchuk,Lucian Arye
TI  - Efficient and Inefficient Sales of Corporate Control
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4788
PY  - 1995
Y2  - October 1995
UR  - http://www.nber.org/papers/w4788
L1  - http://www.nber.org/papers/w4788.pdf
N1  - Author contact info:
Lucian A. Bebchuk
Harvard Law School
1545 Massachusetts Avenue
Cambridge, MA 02138
Tel: 617/495-3138
Fax: 617/812-0554
E-Mail: bebchuk@law.harvard.edu
AB  - This paper develops a framework for analyzing transactions that transfer a company's controlling block from an existing controller to a new controller.  This framework is used to compare the market rule, which is followed in the United States, with the equal opportunity rule, which prevails in some other countries.  The market rule is superior to the equal opportunity rule in facilitating efficient transfers of control but inferior to it in discouraging inefficient transfers.  Conditions under which one of the two rules is overall superior are identified; for example, the market rule is superior if existing and new controllers draw their characteristics from the same distributions.  Finally, the rules' effects on surplus division are analyzed and this examination reveals a rationale for mandatory rules.
ER  -