SINCE the early 1970s the number of U. S. companies involved in mergers, acquisitions, and other types of ownership change has increased markedly: from 926 completed transactions in 1974 to 2,326 in 1981, and 4,024 in 1986. The number has in effect doubled about every six or seven years (table 1). And the value of the companies involved increased almost sixfold between 1980 and 1986, far outpacing the 33 percent increase in the consumer price index and the 17 percent increase in the producer price index. These developments have stimulated intense debate on the consequences of changes in ownership, particularly for economic efficiency. The debate has potentially important policy implications, because a considerable amount of federal and state legislation aimed at restricting mergers and acquisitions, especially those resulting from hostile takeovers, has been proposed. Whether such legislation is desirable depends to an important extent on whether ownership change increases or decreases efficiency.