Toward Undistorted Choice and Equal Treatment in Corporate Takeovers

This paper proposes two objectives - undistorted choice and equal treatment - for the legal rules governing corporate acquisitions in general, and corporate takeovers in particular. Undistorted choice is essential to the efficient operation of the market for corporate assets and that equal treatment is suggested by both efficiency and fairness considerations. Current takeover rules, I argue, lead to distorted choice and unequal treatment. I therefore put forward a set of rules that would ensure undistorted choice and equal treatment in corporate takeovers without creating any significant efficiency costs. Although the analysis focuses on takeovers, it also considers the legal rules that should govern other methods of corporate acquisition.