The 1980s

This chapter focuses on the 1980s, a market-oriented decade that marked the demise of managerial capitalism. Entrepreneurial ability became more highly prized than managerial competence, and, primarily due to increased takeover activity, a managerial comfort zone from which public company executives had benefitted was substantially eroded. During “the Deal Decade” takeover bids, most conspicuously ones launched by flamboyant corporate “raiders,” provided executives eager to forestall an unwelcome approach with a potent incentive to bolster shareholder returns. Deregulation and liberalized access to capital simultaneously expanded the discretion available to public company executives and intensified competitive pressure on large firms formerly insulated by substantial barriers to entry.

Activist Hedge Funds

Activist hedge funds (AHFs), a relatively new alternative investment strategy, have had a large and growing impact on investing and on how public companies are managed. Although activist investing was once the province of corporate raiders, it is now an accepted hedge fund strategy. Often acquiring an influential stake in an undervalued public company before direct intervention, AHFs create their own catalyst for share appreciation. The actions or interventions taken by an AHF can range from direct communication with a board or management team to launching highly visible proxy fights or legal action. Through a review of academic and professional literature, this chapter offers a look into the relevant public policy discussion, implications for target companies in the short and long run, and the techniques AHFs commonly deploy.

Business Ethics: Who Are The Good Guys?

The media often includes much concern about profits in business. The term is misunderstood by many lay people and some business people. When the real meaning of the word, and its place in business and society are understood, the question is not whether profits are too high. The question is whether they are high enough, or even exist. Evidence and examples taken from selected common shares show that profit is often too low. In 1980 there was much ado about high corporate profits; especially in the oil business, which was the current scapegoat of the media. A monograph was written that examined corporate profits over a ten year period. The new scapegoats of the late 1980s are corporate raiders. It seems worthwhile to update the 1980 work and look at corporate profits from the popular ethics point of view.

Hostile Enterprise Takeovers: Russia's Economy in 1998–2002

The period following the change of presidency in Russia in 1999–2000 featured multiple corporate confl icts and enterprise takeovers. This resulted in the largest redistribution of major assets of the Russian economy after the 1993–1994 privatization. This redistribution was exercised through extensive use of bankruptcy law enforced by state coercive organizations in the interests of powerful corporate raiders and privileged business groups. This article examines the origins, logic, methods, and outcomes of enterprise takeovers in Putin's Russia. It focuses on the uses of legislation and its selective enforcement by the state, which—to date—remains one of the major complications of the transitional period.