The research suggests that the City Code on Takeovers and Mergers, together with related company law rules, is highly effective in protecting the interests of target shareholders during bids. These shareholders are protected, in particular, by rules mandating disclosure of information and preventing target boards from taking certain actions to frustrate bids. The implications for economic efficiency of this aspect of the Code are not clear, however. This could be seen as encouraging a robust market for corporate control in the UK, thereby enhancing allocative and productive efficiency. However, special legal protection for target shareholders, at the expense of other stakeholder groups, could also trigger an inefficiently high level of bid activity.
Many bids result in losses for shareholders of the acquiring firm, and for other stakeholders.
Nor is there clear evidence that takeovers are more successful than other forms of corporate restructuring in bringing about the conditions for improved managerial practice within organisations. The comparative analysis has found that in the USA, where takeover activity was particularly intense in the 1980s, the adoption of state stakeholder' statutes appears to have dampened down hostile takeovers, although it is too early to say whether this is a longer-term change or a consequence of cyclical factors. However, the relative decline of the market for corporate control has led many US analysts to focus on internal control mechanisms as devices for holding management accountable. Hostile takeovers in mainland European countries remain highly exceptional, and internal control mechanisms are still pre-eminent. Despite the adoption by the Frankfurt stock exchange of a shareholder-protection code, an active market for corporate control along the UK or US models is a distant prospect.