If at First You Don’t Succeed: The Effect of the Option to Resolicit on Corporate Takeovers

Gillette, Ann and Noe, Thomas (2006) If at First You Don’t Succeed: The Effect of the Option to Resolicit on Corporate Takeovers. Review of Financial Studies, 19 (2). pp. 561-603.

Abstract

This article models, and experimentally simulates, the free-rider problem in a takeover when the raider has the option to “resolicit,” that is, to make a new offer after an offer has been rejected. In theory, the option to resolicit, by lowering offer credibility, increases the dissipative losses associated with free riding. The outcomes of our experiment support this prediction and produce losses from free riding even higher than theoretically predicted. These dissipation losses reduce raider gains to less than 3% of synergy value of the acquisition

Item Type: Article
Keywords: Corporate takeovers; Experimental economics; Resolicit; finance
Subject(s): Finance
Date Deposited: 26 Feb 2012 15:57
Last Modified: 24 Sep 2018 13:25
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/2635

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