The market for corporate control is part of the wider topic of corporate governance. Just as there is a competitive market for products, such as [Page 2179]oranges or computers, there is an analogous market for the control of corporations. Participants in this market include shareholders, financial institutions, and managers. They compete in various ways to control the direction and strategies of corporations in order to control ultimately the rents generated by the firm. In theory, these multiple agents exercise discipline on the firm and its governance structure and mitigate agency costs, though there are many potential flaws. The large, modern firm experiences a separation of ownership and control: While managers and the board of directors control the activities of the firm, they are typically not ...