were raised concerning the adverse effects on the American economy which may stem from mergers and acquisitions of this type.7 These questions were both macroeconomic and microeconomic in character, and they held the potential to impact all strata of the economy.8
4M. I. Weinstein, "A Curmudgeon's View of Junk Bonds," Journal of Portfolio Management (Spring 1987): 76.
6J. Brooks, The Takeover Game (New York: Harper & Row, Publishers, 1987), 11.
7D. Bandow, "Are Hostile Takeovers Good for the Econ omy?" Business and Society Review, 63 (Fall 1987): 45 49.
Diversification has long been recognized as a desirable goal for both firms and investors.9 Diversification is viewed as a viable means of reducing risk in a variety of contexts.10 A cursory consideration of diversification attained through corporate acquisition and merger activity, therefore, would tend lead one to a conclusion that such a result could only be beneficial for the economy as a whole, as well as for indivi dual firms, investors, and consumers. A perusal of the matter, however, brings to light some contentions which lead to less sanguine conclusions.11 More specifically, the contentions implicate acquisitions and mergers accomplished through LBOs in undesirable economic outcomes. Several states acted in the 1980s to make hostile corpor ate takeovers (particularly those structured through an LBO) more difficult or impossible.12 At the federal level of government, there exists both strong opposition to, and strong
9R. I. Robinson, and D. Wrightsman, Financial Markets: The Accumulation and Allocation of Wealth, 4th ed. (New York: McGraw Hill Book Company, 1989), 106.
10R. Brealey, and S. Myers, Principles of Corporate Finance, 3rd ed. (New York: McGraw Hill Book Company, 1990), 156.
11L. Trevor, "The Great Takeover Debate: Vote No, Based on the Facts," Financial Executive, March April 1988, 51, 53 56; J. ...