MANAGERIAL RESPONSE TO A HOSTILE TAKEOVER IN AN UNCERTAIN LEGAL ENVIRONMENT - THE CASE OF UNION-CARBIDE

Following the tragedy at its Bhopal, India plant. Union Carbide found itself the object of a hostile takeover attempt in 1985. In spite of great uncertainty regarding its final legal liability, Union Carbide's management opposed the offer and began an aggressive program of asset and financial restructuring. From an analysis of the performance of Union Carbide's common stock, Sant and Ferris find that the financial impact of the Bhopal accident was dissipated within a year. Using additional accounting and industry data, they draw universal conclusions regarding the international management of complex technologies and firm valuation in the presence of foreign legal threats. © 1993.