Hostile Takeovers as a Way of Effectiveness Improvement

If a takeover is successful, the existing management is usually terminated. The target company's management therefore uses a wide variety of strategies to foil the merger attempt. All these strategies prevent a company from changing top management. It can be a source of inefficiency, namely it can be disadvantageous for shareholders. But this inefficiency can be lessened by the threat of a hostile takeover. So, the threat of a hostile takeover is the part of the mechanism disciplining managers to maximize company profits. The article presents methods of defence against hostile takeovers and influence of those methods on firm's activities and its value