The corporate restructuring activity of the 1980s, sparked by potential external capital market intervention, is believed to have been primarily directed at correcting the diversification mistakes of the 1960s and 1970s, which had led to poor corporate performance. Assuming that investor gains from corporate restructurings are unbiased expectations regarding future efficiency gains, many researchers concluded that the market for corporate control is an efficient external control mechanism and that the restructuring programs of the 1980s will, on average, be followed by substantial improvements in corporate performance. To examine whether those improvements were achieved, this paper analyzes the long‐term operating and financial performance of the 50 most aggressive US participants in the takeovers and corporate restructuring activity during the 1980s. The results support the hypothesis that the market for corporate control is an efficient external corporate control mechanism of last resor