Title :
Bidding Strategy in Takeover
Author_Institution :
Sch. of Int. Trade & Econ., Univ. of Int. Bus. & Econ., Beijing, China
Abstract :
The paper models the toehold acquisition and bid price decision problem faced by bidders in takeovers. The model builds upon the model of takeover proposed by Grossman and Hart (1980) and its later extensions by Shleifer and Vishny (1986) , Hirshleifer and Titman (1990) and Chowdhry and Jegadeesh (1994). By allowing the firm value to decrease after a failed tender offer, I find that the bidder with greater improvement of target firm value will overbid while low value enhancing bidder will not. In this sense, I provide an explanation for the overbidding behavior in takeover of only one bidder.
Keywords :
commerce; corporate acquisitions; bid price decision problem; bidding strategy; takeover; toehold acquisition; Biological system modeling; Business; Economics; Finance; Games; Resistance; Resists;
Conference_Titel :
Management and Service Science (MASS), 2011 International Conference on
Conference_Location :
Wuhan
Print_ISBN :
978-1-4244-6579-8
DOI :
10.1109/ICMSS.2011.5998440
