This preview shows page 1. Sign up to view the full content.
Unformatted text preview: 8 “(C)orporate growth enhances the social prominence, public prestige, and political power of senior executives. Rare is the CEO who wants to be remembered as
presiding over an enterprise that makes fewer products in fewer plants in fewer
countries than when he or she took oﬃce — even when such a course increases
productivity and adds hundreds of millions of dollars of shareholder value” • Jensen’s Free Cash Flow Theory M&S 452 — Strat and Org
c 2008 Scott Schaefer – There are many ways to take over a company. Why the sudden surge in
debt-ﬁnanced deals? – If a takeover is to be proﬁtable for the raider, then it must be the case that
value is somehow created. How can the simple act of changing ownership
structure create value? • Why is this an interesting question? Consider: • Jensen’s motivating question: Why was there a wave of highly leveraged corporate
takeovers in the 1980s? M&S 452 — Strat and Org
c 2008 Scott Schaefer 29 What to Take Away 3. Commitment Value of Debt...
View Full Document
This document was uploaded on 02/20/2014.
- Spring '14