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Contestants, Profiteers, and the Political Dynamics of MarketizationHow Shareholders gained Control Rights in Britain, Germany, and France$
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Helen Callaghan

Print publication date: 2018

Print ISBN-13: 9780198815020

Published to Oxford Scholarship Online: January 2018

DOI: 10.1093/oso/9780198815020.001.0001

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(p.39) 3 Britain
Contestants, Profiteers, and the Political Dynamics of Marketization

Helen Callaghan

Oxford University Press

Chapters 3, 4, and 5 examine empirically why markets for corporate control expanded even though incumbents resisted exposure to competition. The British case, presented in Chapter 3, illustrates the doubly self-reinforcing feedback effects of market-enabling takeover rules. Even in Britain, rules conducive to takeover bids did not emerge until after World War II. The first regulatory blow to the entrenched position of corporate insiders was dealt not by shareholder-oriented market liberals, but by stakeholder-oriented parties to their left. Marketization was an unintended side-effect eagerly snatched up by incumbents’ symbionts, namely merchant banks, who abandoned their former allies to become profiteers. Marketization gathered speed not only because the pro-market clienteles grew, but also because opposition waned as competition intensified. I attribute this to feedback effects of marketization on the power resources, attitudes, and behavior of politically relevant groups, including institutional investors, bankers, managers, and trade unions.

Keywords:   UK, corporate governance, company law reform, takeover regulation, Conservative party, Liberal party, Labour party, takeover panel, City Code, interest groups

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