|
|
|
|
|
|
Resources |
|
|
|
Corporate Raiders: Do Ethics Count?
| Article
# : |
17187 |
|
|
Section : |
MODERN THOUGHT
|
| Issue
Date : |
12 / 1990 |
4,431 Words |
| Author
: |
Fred L. Fox
Fred L. Fox is director of communications of the Pennsylvania
Chamber of Business and Industry. |
Any future historical picture of the greed and excess of the 1980s will include a prominent view of already wealthy corporate raiders attacking the foundation of wealth creation. The willingness to sacrifice investment in minerals extraction, manufacturing, transportation, distribution, and basic and applied research on the altar of hostile takeovers, junk bonds, and highly leveraged buyouts can only be seen as a temporary aberration in an otherwise healthy economy.
There is no doubt that hostile corporate takeovers cause dramatic losses: plant closings, employee terminations, economic destruction of communities, and significant increases in corporate debt. What is now known is that hostile takeovers, contrary to the assertions of some takeover proponents, do not create additional wealth in our economy, and do not, over the long term, necessarily provide a good mechanism for shareholders to realize full value for their shares.
Policy makers have frequently been misled by theories about the expected effect of hostile takeovers. Many believed that hostile takeovers removed incompetent, entrenched management, fostered operating efficiencies, reallocated resources to their highest and best use, and created wealth for shareholders and the economy as a whole. The overwhelming evidence now leads to a clear conclusion that the facts are otherwise.
· Productive corporate investments are being eliminated as companies restructure in the aftermath of takeover attempts. Corporate managers are then forced to take a short-term perspective, resulting in reduced research and development and other long-term investments.
... (1963 of 28131 Characters)
Read Full Article
|
|
