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We scrutinize the scope of auctions in the presence of downstream interactions and information externalities by using the topical example of a firm acquisition. We show that no mechanism exists that allows an investor to acquire a low-cost firm under incomplete information: a separating auction...
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This paper presents the results of an experimental study of takeover auctions with toeholds. Consistent with the theory …
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decisions involved in any corporate takeover attempt: (1) deal initiation, (2) pre-offer toehold acquisition, (3) offer price … made in takeover negotiations where the outside option is the outcome of an open auction. Empirical findings include the … and not the bidder. (2) Notwithstanding takeover premiums averaging 40+%, only a small fraction (less than 5%) of bidders …
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