Why is this an interesting question consider jensens

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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...
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This document was uploaded on 02/20/2014.

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