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...

When the set of potential bidders is fixed, we show that the failure of the seller to invite all of them does not necessarily lower the revenue, especially when the resale market is efficient. In the model, the bidding strategies of the included bidders take the resale value into consideration,...

This paper quantifies the degree of agency conflicts in acquiring firms. By estimating managerial valuations using a structural method and calculating shareholder valuations from stock market reactions to takeovers, I find that acquiring managers overvalue targets by 63% of target...

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...

When bidders in a corporate takeover have related resources and post-acquisition strategies, their valuations of a target are likely to be interdependent. This paper analyzes sequential-entry takeover contests in which similar bidders have correlated private valuations. The level of similarity...

The dozen largest private equity firms are accused of bid-rigging in the M&A market due to the practice of team bidding in groups known as clubs or consortia. Comparatively low offer premiums are unsurprising in low-synergy mergers and no conspiracy theory is needed to explain why financial...

Using data on auctions of companies, we estimate valuations (maximum willingness to pay) of strategic and financial bidders from their bids. We find that a typical target is valued higher by strategic bidders. However, 22.4% of targets in our sample are valued higher by financial bidders. These...

The $4.7 billion acquisition of Smithfield Foods, Inc. by China's Shuanghui International Holdings Ltd. (now WH Group Ltd.) marks the largest Chinese takeover of a U.S. company in history. In this study, we explored how this acquisition affected consumers' willingness-to-pay for meat products in...

We run experiments on English Auctions where the bidders already own a part (toehold) of the good for sale. The theory predicts a very strong effect of even small toeholds, however we find the effects are not so strong in the lab. We explain this by analyzing the flatness of the payoff...

In this paper, we empirically identify rational overbidding using evidence from Hong Kong land auctions. In particular, we test for rational overbidding through a toehold effect in bidding behavior (Burkart (1995), Bulow, Huang and Klemperer, (1999)). In Hong Kong, auctions are widely used by...