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Overcoming Bias Commenter's avatar

What? Surely you don't believe that disastrously bad CEOs can't exist.

It may not be very common but sometimes the people running the company just aren't doing a good job.

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Overcoming Bias Commenter's avatar

Your missing the point.

The issue is that by protecting companies from raiders the ability of shareholders to regulate the behavior of management is REDUCED.

In some sense raiders are providing a service to solve the collective action problem. The costs to coordination necessary to extract the value in the company which the managers are wasting (possibly to their own benefit) is too high for them to do the extraction themselves but they end up with more money by letting a raider come in and centralize ownership and achieve just that.

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