Can preemptive bidding in takeover auctions be socially optimal? Yes it can |
| |
| Institution: | 1. Department of Mathematics and Research Institute of Natural Science, Gyeongsang National University, Jinju 660-701, Republic of Korea;2. Department of Mathematics and Statistics, York University, 4700 Keele St., Toronto, ON, Canada;1. The John B. and Lillian E. Neff Endowed Chair in Finance, The University of Toledo, 2801 W. Bancroft Street, Toledo, OH 43606, United States;2. Department of Finance and Economics, College of Business Administration, Georgia Southern University, Statesboro, GA 30460, United States |
| |
| Abstract: | This paper analyzes a model of preemptive jump bidding in private value takeover auctions with entry costs. It shows that when the second bidder owns a fraction of the target firm preemptive jump bidding leads to a higher social surplus, improves the expected profit of both bidders and reduces the expected final price. Such a toehold also leads to higher jump bids. The model implies that preemptive bidding hurts the minority shareholders but benefits the large shareholder of the target firm. |
| |
| Keywords: | Jump bidding Toeholds Takeover auction |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
