Comment by yummyfajitas
16 years ago
Shareholders used to try to improve a company - it was quite popular in the 70's and 80's. Ever watch the movie "Wall Street?
What happened since then is that legislators and courts have become hostile to corporate raids, and have mostly made it toothless. We would have plenty of shareholder activism if it wasn't for that.
Yes. I also never understand the reason behind poison pills (part from shielding management). Why should shareholders limit their own rights to sell the company to somebody who wants to run it?
`Corporate raid' is a term as backwards as `piracy' for copyright infringement. Those `raiders' buy a company with their own money (or money they borrowed) from shareholders willing to accept their price. They should be allowed to do whatever they want with their newly acquired company.
The only problem is they rarely buy the whole company, often they just get a controlling share. At which point they can do a pump and dump which is great if you sell at the right time but it tends to hurt long term investors.
How do you pump and dump a large company that you just purchased at a premium?
Incidentally, if such a pump and dump scheme was performed, the guilty party is completely obvious. A minority shareholder lawsuit would be readily forthcoming.
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