The Governor discusses some of the issues arising in the relationship between industry and the financial sector in an increasingly innovative and competitive financial environment. He looks, in particular, at the question of contested takeovers and argues that:
- Boards cannot necessarily expect protection from unwelcome predators, which would lead to less efficient management and more expensive financing.
- Nevertheless, there have been some cases recently where opportunistic predators have sought to unsettle the management of a well-run company to secure a favourable short-term impact on the share price, partly or primarily at the expense of the future: and this must be a matter of great concern.
- Approaches of this kind give rise to temptation to engage in tactics that are immensely damaging to the interests of shareholders and the reputations of the companies and advisers involved. Those in the City who act in these cases must accept full responsibility for the transactions that result and should exercise the most careful judgement from the outset with respect to the clients for whom they act and the activities contemplated.
- Companies can act to protect themselves against speculative disruption by fostering good relations with shareholders, in particular by improved disclosure of information on their longer-term aims and plans for research, development and investment.