This paper presents a model of corporate takeovers in a framework of auctions with multidimensional signals. The model considers a target firm whose value for each bidder is composed of both common and private values. A symmetric equilibrium is developed where, absent ex post payment, inefficient takeovers may take place because information regarding common value cannot be aggregated. We argue that inefficient takeovers are an artifact of conservative bidding strategies and the pure cash offer. Efficient bidders face a possibility that it will have to overpay and, as a result, they fail to be allocated the target firm with a positive probability. We show that inefficient takeovers do not take place if bidders are allowed to use ex post payment in addition to cash.
Keywords: conservative bidding; ex post payment; inefficient takeovers; multidimensional signals; takeover contests
학술대회/행사
학술대회 및 야외답사
학술대회/행사
[2013년 제 1차] THE ROLE OF THE METHOD OF PAYMENT IN CORPORATE TAKE
작성자 : 관리자
조회수 : 976
게시일 :
2013-03-04