Abstract
The 1980s witnessed a dramatic increase in hostile takeovers in the United States. Proponents argue that well- planned mergers enhance the value of the firm and the value of the firm to society. Critics typically argue that undesired takeovers ultimately harm society due to external costs not borne by the acquiring firm. To be socially responsible, the manager must consider the effects of the merger/acquisition on all stakeholders. Different traditional ethical frameworks for decision making are proposed and reviewed. A model is proposed.
Similar content being viewed by others
References
Adams, W. and J. W. Brock: 1989, ‘Merger-Mania: An Empirical Critique’, in D. L. McKee (ed.), Hostile Takeovers: Issues in Public and Corporate Policy (Praeger, New York), pp. 33–43.
Bishop, M. and J. Kay (eds.): European Mergers and Merger Policy (Oxford University Press, Oxford).
Buono, A. F. and J. L. Bowditch: 1989, The Human Side of Mergers and Acquisitions (Jossey-Bass, San Francisco).
Carr, A. A.: Business is a Game (New American Library, New York).
Cooke, T. E.: 1988, International Mergers and Acquisitions (Basil Blackwell, Oxford).
Dartmouth College v. Woodward. 4 Wheat 515, 4 L Ed 629.
Di Norcia, V.: 1988, ‘Mergers, Takeovers, and a Property Ethic’, Journal of Business Ethics 7, 109–116.
Dodd, P.: 1986, ‘The Market for Corporate Control: A Review of the Evidence’, in J. M. Stern and D. H. Chew (eds.), The Revolution in Corporate Finance (Basil Blackwell, Oxford), pp. 343–356.
Donaldson, T.: 1989, ‘Corporate Takeovers: The Moral Takeovers’, in M. W. Hoffman, R. Frederick, and E. S. Petry, Jr. (eds.), The Ethics of Organizational Transformation: Mergers, Takeovers and Corporate Restructuring (Quorum Books, New York), pp. 3–13.
Drucker, P. F.: 1986, ‘Corporate Takeovers — What is to be Done’, The Public Interest 82, 3–24.
Eells, R. and C. Walton: 1961, Conceptual Foundations of Business (Irwin, Homewood IL).
Evan W. and R. Freeman: 1988, ‘A Stakeholder Theory of the Modern Corporation: Kantian Capitalism’, in T. L. Beauchamp and N. E. Bowie (eds), Business Ethics (Prentice Hall: Englewood Cliffs NJ).
First National Bank of Boston v. Bellotti. 435 U.S. 765.
French, P. A.: 1979, ‘The Corporation as a Moral Person’, American Philosophical Quarterly 16, 297–215.
Friedman, M.: Sept. 13 1970, ‘The Social Responsibility of Business is to Increase Profits’, New York Times Magazine. Reprinted in T. L. Beauchamp and N. E. Bowie (eds.), Business Ethics (Prentice Hall, Englewood Cliffs NJ).
Garrett, T. M.: (1966), Business Ethics. New York: Appleton-Century-Crofts.
Garrett, T. M. and R. J. Klonoski: 1986, Business Ethics (Prentice Hall, Englewood Cliffs NJ).
Golbe, D. L. and L. J. White: 1988, ‘A Time-Series Analysis of Mergers and Acquisitions in the U.S. Economy’, in A. J. Auerbach (ed.), Corporate Takeovers: Causes and Consequences (University of Chicago Press, Chicago), pp. 265–302.
Hanky, K.: 1992, ‘Hostile Takeovers and Methods of Defense: A Stakeholder Analysis’, Journal of Business Ethics 11, 895–913.
Heffern, G. E.: 1989, ‘Ethical Considerations in Takeovers’, in D. L. McKee (ed.), Hostile Takeovers: Issues in Public and Corporate Policy (Praeger, New York), pp. 79–84.
Holly, B. P.: 1989, ‘Corporate Takeovers and Regional Economic Development: An Ohio Perspective’, in D. L. McKee (ed.), Hostile Takeovers: Issues in Public and Corporate Policy (Praeger, New York), pp. 59–68.
Ishizumi, K.: 1990, Acquiring Japanese Companies: Mergers and Acquisitions in the Japanese Markets (Basil Blackwell, Cambridge MA).
Jensen, M. C.: 1984, ‘Takeovers: Folklore and Science’, Harvard Business Review 62, 109–121.
Jensen, M. C. and Ruback, R. S.: 1983, ‘The Market for Corporate Control: The Scientific Evidence’, Journal of Financial Economics 11, 5–50.
Karier, T.: 1993, Beyond Competition: The Economics of Mergers and Monopoly Power (M. E. Sharpe, Armonk NY).
Laczniak, G. R.: 1983, ‘Framework for Analyzing Marketing Ethics’, Journal of Macromarketing 3, 7–18.
Law, W. A.: 1986, ‘A Corporation is More Than Its Stock’, Harvard Business Review 64, 80–83.
Lowenstein, L.: 1985, ‘Management Buyouts’, Columbia Law Review 85, 730–784.
Magenheim, E. B. and D. C. Mueller: 1988, ‘Are Acquiring-firm Shareholders Better Off After Acquisition?’ in J. C. Coffe, L. Lowenstein and S. Rose-Ackerman (eds.), Knights, Raiders and Targets (Oxford University, New York), pp. 171–193.
Manning, R. C.: 1984, ‘Corporate Responsibility and Corporate Personhood’, Journal of Business Ethics 3, 77–84.
Manning, R. C.: 1988, ‘Dismemberment, Divorce and Hostile Takeovers: A Comment on Corporate Moral Personhood’, Journal of Business Ethics 7, 639–643.
Mill, J. S.: 1957, Utilitarianism (Liberal Arts Press, New York).
Newton, L. H.: 1989, ‘Takeovers, Makeovers, and Destruction: The Ethics of Corporate Transformation’, in M. W. Hoffman, R. Frederick, and E. S. Petry, Jr. (eds.), The Ethics of Organizational Transformation: Mergers, Takeovers and Corporate Restructuring (Quorum Books, New York), pp. 27–42.
Newton, L. H.: 1988, ‘Charting Shark-Infested Waters: Ethical Dimensions of the Hostile Takeover’, Journal of Business Ethics 7, 81–87.
Robin, D. P. and R. E. Reidenbach: 1987, ‘Social Responsibility, Ethics, and Marketing Strategy: Closing the Gap between Concept and Application’, Journal of Marketing 51, 44–58.
Shleifer, A. and L. H. Summers: 1988, ‘Breach of Trust in Hostile Takeovers’, in A. J. Auerbach (ed.), Corporate Takeovers: Causes and Consequences (University of Chicago Press, Chicago), pp. 33–56.
Sigler, A.: 1989, ‘What is a Corporation's Responsibility in the U.S. Today’, in M. W. Hoffman, R. Frederick and E. S. Petry, Jr. (eds.), The Ethics of Organizational Transformation: Mergers, Takeovers and Corporate Restructuring (Quorum Books, New York), pp. 85–90.
Slesinger, R. E.: 1985, ‘The Market for Corporate Control’, in U.S. Congress Joint Economic Committee (ed.), Economic Report of the President (U.S. government Printing Office, Washington DC), pp. 187–216.
Smith, A.: 1776, An Inquiry into the Nature and Causes of the Wealth of Nations, Reprint ed. (Modern Library, New York), 1967.
Steiner, G. A. and J. F. Steiner: 1988, Business Government and Society: A Managerial Perspective (Random House, New York).
Subcommittee on Energy and Commerce: 1984, Testimony before the Subcommittee on Energy and Commerce, U.S. House of Representatives, 98th Cong., 2d Sess. (U.S. Government Printing Office, Washington DC), Serial No. 98-142.
Subcommittee on Telecommunications, Consumer Protection, and Finance: 1985, Corporate Takeovers: Hearings Before Subcommittee on Telecommunications, Consumer Protection, and Finance. (U.S. Government Printing Office, Washington DC).
Trevor, L. B.: 1989, ‘Hostile Takeovers: A U.S. Falkland Islands Where the Argentines Always Win’, in D. L. McKee (ed.), Hostile Takeovers: Issues in Public and Corporate Policy (Praeger, New York), pp. 16–32.
Tuleja, T.: 1985, Beyond the Bottom Line: How Business Leaders Are Turning Principles into Profits (Facts on File Publications, New York).
Vedder, R. K.: 1989, ‘Three Cheers for the Corporate Raider’, in D. L. McKee (ed.), Hostile Takeovers: Issues in Public and Corporate Policy (Praeger, New York), pp. 3–15.
Werhane, P.: 1988, ‘Two Ethical Issues in Mergers and Acquisitions’, Journal of Business Ethics 7, 41–45.
Wirth, T. E.: 1987, Public Policy Implications for the Economy and Corporate Governance (U.S. Government Printing Office, Washington DC).
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Chase, D.G., Burns, D.J. & Claypool, G.A. A Suggested Ethical Framework for Evaluating Corporate Mergers and Acquisitions. Journal of Business Ethics 16, 1753–1763 (1997). https://doi.org/10.1023/A:1005794127954
Issue Date:
DOI: https://doi.org/10.1023/A:1005794127954