Do breakup fees lead to efficient takeover?
We examine the use of breakup fees as a device for target firms to recruit white knights in response to a hostile takeover bid. When bidders have interdependent valuations of the target, the possible use of a breakup fee to subsidize entry of a subsequent bidder overdisciplines the initial bidder's preemption and results in excessive entry by a second bidder.
Year of publication: |
2010
|
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Authors: | Che, Yeon-Koo ; Kim, Jinwoo ; Lewis, Tracy R. |
Published in: |
Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 108.2010, 1, p. 52-54
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Publisher: |
Elsevier |
Keywords: | Corporate takeover Breakup fees Auction Interdependent values |
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