Andy Cosh, Paul Guest and Alan Hughes This chapter addresses the changing nature of corporate governance in the United Kingdom over recent decades and examines whether these changes have had an impact on the UK market for corporate control. The disappointing outcomes for acquiring company shareholders in the majority of corporate acquisitions, public discontent with some pay deals for top executives and some high-proﬁle corporate scandals led in the early 1990s to a call for governance reform. The scrutiny of governance in UK companies has intensiﬁed since the publication of the Cadbury Report in 1992 and has resulted in calls for changes in the size, composition and role of boards of directors, in the role of institutional shareholders, the remuneration and appointment of executives, and in legal and accounting regulations. We review the background to these changes and the consequences of the changes since 1990 for governance structures. Finally, we examine whether these changes have aﬀected takeover performance in recent years. Our analysis is speciﬁc to the institutional circumstances of the UK although we refer where appropriate to takeover studies in other countries. MERGER OUTCOMES AND MANAGERIALISM In their seminal book on the emerging modern corporation, Berle and Means demonstrated the growing separation of ownership from control with an increasing dispersion of shareholdings along with an increasing concentration of economic power. Taken together, these forces required us to question the assumption that ﬁrms would be run in the interests of their shareholders since product market competition...
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