Large shareholders and market discipline in a regulated industry: A clinical study of mellon bank

Abstract

The change in control at Mellon bank in 1987 sheds a unique light on several aspects of corporate control, as Mellon was one of few banks with a large shareholder. The bank underwent a management change earlier than most peer banks; contrary to some theoretical models, this happened without the large shareholder acquiring a majority stake to effect the change. Mellon's rapid recovery relative to peer banks reveals the inability of regulatory intervention to fully substitute for market based forms of corporate control.