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Stock selling during takeovers
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Ordonez-Calafi, Guillem and Thanassoulis, John (2020) Stock selling during takeovers. Journal of Corporate Finance, 60 . 101550. doi:10.1016/j.jcorpfin.2019.101550 ISSN 0929-1199.
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Official URL: https://doi.org/10.1016/j.jcorpfin.2019.101550
Abstract
Stock sales during takeover negotiations weaken the target board's ability to recommend against the takeover, i.e., to resist. Sophisticated shareholders therefore face a coordination problem when deciding whether to sell-out early; and their actions generate a feedback loop between trading volumes and takeover outcomes. Bidding rms, anticipating the pressurising e ect of future share sales on the target board, may reduce their bids. We study these tensions theoretically. We nd that increasing the in uence of shareholders during the bidding process lowers equilibrium bids; elongates the bidding process; but raises the overall probability of bid acceptance; and raises expected premia for unsophisticated shareholders.
Item Type: | Journal Article | ||||||||
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Divisions: | Faculty of Social Sciences > Warwick Business School | ||||||||
Journal or Publication Title: | Journal of Corporate Finance | ||||||||
Publisher: | Elsevier Science BV | ||||||||
ISSN: | 0929-1199 | ||||||||
Official Date: | February 2020 | ||||||||
Dates: |
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Volume: | 60 | ||||||||
Article Number: | 101550 | ||||||||
DOI: | 10.1016/j.jcorpfin.2019.101550 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 9 December 2019 | ||||||||
Date of first compliant Open Access: | 12 June 2021 | ||||||||
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