Capital control and capital markets have gained much attention in recent years as the world economy has seen the rise of multinational corporations and international capital markets. Investors in Tokyo can now invest in British companies, and the takeover, once an American staple of redeploying capital, has become more common in other parts of the world.
A proposed directive offered by the European Union is designed to enhance the ability of companies to engage in merger and acquisition activity in Europe. However, these authors take issue not only with whether the directive would accomplish this task, but also with whether the directive would actually make it more difficult for takeovers to take place. The issue of whether or not takeovers are good or bad for the companies and economies involved is not addressed at length.
The authors conclude that the three main points of the proposed directive, including universal bid pricing, mandatory 100 percent bids, and information access to the public, would, in fact, make acquisitions more difficult to achieve and thus not meet the stated goals of the directive. Given that acquisitions are an effective way of redistributing assets, and that the European environment is shifting in favor of this type of activity, the authors come out against the directive as meeting these goals.
Advances in technology, communication and transportation in recent years have created an international market where goods and services are produced in one country and sold in another, or where they are sold in one country after being produced in another while owned by a company located in a third. The multinational corporation has grown out of this market, and investors throughout the world look to various capital markets as ways to build their equity position in promising companies.
Capital markets now exist throughout the world, and time differences mean little when New York, London and Tokyo all com...