Corporate raiding and regulation of the mergers and acquisitions market: effects of soft budget constraints and institutionalization

The article examines how corporate raiding affects the mergers and acquisitions (M&A) market and its regulatory system. The aim is to identify the effects through which raiding influences both the market and the regulator and to propose measures to correct them. The study reviews the regulation of the market for corporate control in the USA, the EU and Russia and shows that its key instrument, ex ante review of transactions by an authorized body, is designed to protect competition and is itself vulnerable to the influence of large market participants. Based on an analysis of the criteria of a raider takeover, the article proposes a definition of raiding in which the key feature is the involvement of an enforcement agent, while illegality is not a necessary condition. A comparative analysis of periods of intensified raiding in the USA, Russia and the post-socialist countries of Central and Eastern Europe reveals two effects: a positive feedback effect from the use of soft budget constraints and the institutionalization of raiding as a mechanism of property redistribution. Both effects may remain latent and may affect the regulator itself. The article proposes measures to protect the regulator from capture (staff rotation, ex post evaluation of merger decisions, expert trust ratings), gradual legalization of the market function of raiding, a structured dialogue with major market participants and a protected channel for anonymous reporting of violations.