Edited by Claire A. Hill and Steven Davidoff Solomon
Chapter 17: Tender offers and disclosure: the history and future of the Williams Act
AbstractThis chapter focuses on the history and future of the Williams Act. In particular, it details the macroeconomic and M & A environment against which the Williams Act was adopted in 1968 and compares it to today’s environment. In the 1960s, the macroeconomic environment was markedly different from today’s economic environment. Individual investors were the dominant owners of corporate equities, market trading was not as robust as it is today, and other barriers to tender offers and stock accumulations, like poison pills, were non-existent. Today, institutional investors are the dominant equity owners, shareholders are much more active, and market trading is robust. These changes must be taken into account when considering the continuing viability of the disclosures required under the William Act. Law and economics experts, like Henry Manne, have long argued that disclosure is not the correct path to controlling managerial abuses. Instead, Manne and other opponents of the Williams Act argued that stock accumulations and tender offers provided a better check on management. Although the macroeconomic environment is much different today than it was in 1960s, managerial abuses still exist. This chapter proposes that prior to amending the Williams Act, the impact of the existing Act on tender offers, stock purchases, and corporate governance must be studied. In addition, any changes should be considered on a holistic basis, taking into consideration the changes in both the macroeconomic environment and corporate governance since the 1960s.
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