Inspired by some spectrum auctions, we consider a stylized license auction with incumbents and one entrant. Whereas the entrant values only the bundle of several units (synergy), incumbents are subject to non-increasing demand. The seller proactively encourages entry and restricts incumbent...

We consider takeover bidding in a Cournot oligopoly when firms have private information concerning the synergy effect of merging with a takeover target. Two auction rules are considered: standard first-price and profit-share auctions, supplemented by entry fees. Since non-merged firms benefit...

I show that firms may optimally place their own equity with other firms in anticipation of possible future corporate control activity. In the model, a target and potential acquirer can negotiate before synergy values are learned. I find that equity implements an optimal mechanism, benefiting...

I study how possible future corporate control activity can influence equity sales between firms. In the model, a target and potential acquirer can trade a block of the target's equity before takeover values are learned. I find that a sale can benefit both firms at the expense of other potential...

We present unique empirical tests for overbidding using data from Sweden's auction bankruptcy system. The main creditor (a bank) can neither bid in the auction nor refuse to sell in order to support a minimum price. We argue that the bank may increase its expected revenue by financing a bidder...

This study examines the emergence of the Bulgarian stock market and the role of controlling blockholders. A new approach using mass privatization auction data measures the premium for control and demonstrates that, in the absence of legal constraints, majority owners extract more than 85% of...

A number of proposals for reforming Chapter 11 suggest that a mandatory cash auction of the bankrupt firm would lead to more efficient investment outcomes than a reorganization based system. However, recent empirical work describing reorganizations in European countries which mandate the sale of...

Go-shop provisions have changed the way in which private equity firms execute public-company buyouts. While there has been considerable practitioner commentary on go-shops in the three years since they first appeared, this paper presents the first systematic empirical evidence on this new...

This paper characterizes how a target firm should be sold when raiders have prior stakes in its ownership (toeholds). We find that the optimal mechanism needs to be implemented by a non-standard auction which imposes a bias against buyers with high toeholds. This discriminatory procedure is so...

We analyze the role of toeholds (non-controlling but significant equity stakes) as a source of information for a bidder. A toehold provides an opportunity to interact with the target and its management and in the process get a better sense of the possible synergies from a merger or takeover. A...