Okawa, Masaya; Tsujimura, Motoh - In: Applied financial economics 19 (2009) 16/18, pp. 1477-1485
In this article, we study a firm's merger strategy. When two firms merge, there are two types of transaction costs …: fixed and proportional. To study the firm's merger strategy, we formulate the problem faced by the newly merged firm …'s management as an optimal stopping problem. Then, we derive the optimal merger strategy; that is, we find the optimal value of the …