The Ethics of Banking: Conclusions from the Financial Crisis (Issues ...

74 5 Ethics of the Market for Corporate Control
function of disciplining the overall enterprise, including the board or the business
owner. Or, as one managing director put it: “Profit is like health. You need it, and
the more the better. But it’s not why you exist.” 3
What is said here about profit applies all the more to the theory that shareholder
value is the ultimate purpose of the firm. According to this theory, management must
maximize not only profit but also its own company’s share price.
Mergers and Acquisitions: The Capital Market as a Market
for Corporate Knowledge and Know-How
In the most recent evolution of the global capital market, an increasingly prominent
function of the capital market as a market for company shares is to ensure that
not just capital but also management capabilities and knowledge are allocated to
whatever is their best use. A first question to ask is why, at the present time, such
an explosion of mergers and acquisitions (M&A) can be observed. The globalization
of the world economy is a driver of M&A. By buying other firms, the firm
making the takeover bid gains advantages for its network. The integration of entire
new firms, which frequently remain intact as business units after the merger, generates
network advantages of growing importance in comparison with conventional
vertical integration or with efficiency gains through economies of scale.
Purchasing the development stages of products and processes by buying firms in
possession of this know-how also results in a shortening of the temporal duration
of research and development. For a firm launching a takeover bid, the takeover is a
means of buying knowledge and know-how, and thereby short-cutting parts of the
development cycle. It is possible to exploit time zones in a completely new way: in
the domain of research and development, the same project can be worked on globally
for 24 hours a day if the corporation acquires different firms with research and
development activities in all time zones. 4 Through corporate acquisitions or disposals,
a corporation can make adjustments to corporate structure, size and scope, which
would require more time if divisions had to be set up within the old organization.
At the same time, the boundaries of the corporation become more fluid and flexible.
The complexity of products is another factor that increasingly necessitates acquisitions
instead of in-house development, once again in order to save time by acquiring
a new production process rather than taking the laborious and time-consuming route
of developing it oneself.
3 Cf. Th. J. PETERS and R. H. WATERMAN JR. (1982): In Search of Excellence. Lessons from
America’s Best-Run Companies, New York (Harper & Row) 1982.
4 Cf. STEPHAN A. JANSEN: Mergers and Acquisitions. Unternehmensakquisitionen und -
kooperationen Eine strategische, organisatorische und kapitalmarkttheoretische Einführung,
Wiesbaden (Gabler) 3rd edn. 2000, p. 5 f.