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Rent extraction with securities plus cash
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Liu, Tingjun and Bernhardt, Dan (2021) Rent extraction with securities plus cash. Journal of Finance, 76 (4). pp. 1869-1912. doi:10.1111/jofi.13018
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Official URL: https://doi.org/10.1111/jofi.13018
Abstract
In our target‐initiated theory of takeovers, a target approaches potential acquirers that privately know their standalone values and merger synergies, where higher synergy acquirers tend to have larger standalone values. Despite their information disadvantage, targets can extract all surplus when synergies and standalone values are concavely related by offering payment choices that are combinations of cash and equity. Targets exploit the reluctance of high‐valuation acquirers to cede equity claims, inducing them to bid more cash. When synergies and standalone values are not concavely related, sellers can gain by combining cash with securities that are more information‐sensitive than equities.
| Item Type: | Journal Article | ||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce H Social Sciences > HG Finance |
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| Divisions: | Faculty of Social Sciences > Economics | ||||||||
| Library of Congress Subject Headings (LCSH): | Auctions -- Econometric models, Security (Law) -- Econometric models, Consolidation and merger of corporations , Securities | ||||||||
| Journal or Publication Title: | Journal of Finance | ||||||||
| Publisher: | Wiley-Blackwell Publishing, Inc. | ||||||||
| ISSN: | 0022-1082 | ||||||||
| Official Date: | August 2021 | ||||||||
| Dates: |
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| Volume: | 76 | ||||||||
| Number: | 4 | ||||||||
| Page Range: | pp. 1869-1912 | ||||||||
| DOI: | 10.1111/jofi.13018 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Reuse Statement (publisher, data, author rights): | This is the peer reviewed version of the following article: LIU, T. and BERNHARDT, D. (2021), Rent Extraction With Securities Plus Cash. The Journal of Finance. https://doi.org/10.1111/jofi.13018, which has been published in final form at https://doi.org/10.1111/jofi.13018. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions." | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
| Related URLs: |
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