A Game-Theoretic Model of Corporate Takeovers by Major Stockholders

Imelda Yeung Powers
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Imelda Yeung Powers: Yale School of Organization and Management, Box 1A, New Haven, Connecticut 06520

Management Science, 1987, vol. 33, issue 4, 467-483

Abstract: This paper models the exchange between cash and decision power among all stockholders in a company with two major stockholders. It investigates the feasibility and profitability of corporate takeovers, and shows the existence, under some conditions, of pairs of Nash equilibrium strategies that result in one major stockholder taking control of the company. Finally, it solves for threat-resistant strategies (takeover offers that will not be outbid) for both major players, and concludes with a threat-resistant Nash equilibrium solution to the model.

Keywords: corporate takeover bids; oceanic games; threat-resistant strategies (search for similar items in EconPapers)
Date: 1987
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:33:y:1987:i:4:p:467-483

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