Toeholds and signalling in takeover auctions

Anna Dodonova

Economics Letters, 2012, vol. 117, issue 2, 386-388

Abstract: This paper presents a model of preemptive bidding in takeover auctions with toeholds. It shows that when the first bidder owns a fraction of the target firm he is more likely to deter competition and a smaller jump bid is required to do so. It also shows that in the presence of the toehold, the signalling equilibrium reduces the social surplus while it has no effect on the social surplus in the absence of the toehold.

Keywords: Jump bidding; Toeholds; Takeover auction (search for similar items in EconPapers)
JEL-codes: C72 D44 G34 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176512003552
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:117:y:2012:i:2:p:386-388

DOI: 10.1016/j.econlet.2012.06.023

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().