Optimal Acquisition Strategies in Unknown Territories

Onur Koska and Frank Stähler

Journal of Institutional and Theoretical Economics (JITE), 2014, vol. 170, issue 3, 406-426

Abstract: We investigate the optimal acquisition strategy of an investor who wants to acquire a target firm under incomplete information. The response to acquisition offers signals firm productivity, affecting future competition. We identify a competition effect (firms compete for acquisition) and a revelation effect (firms signal productivity). These effects reduce the rejection profits and increase the acceptance probability. If the investor makes simultaneous offers, the revelation effect is a potential threat: a firm may signal low productivity, but may not be acquired. If, however, the investor makes offers sequentially, this threat does not exist, making sequential offers the optimal acquisition strategy.

JEL-codes: F23 G34 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.mohrsiebeck.com/en/article/optimal-acq ... 45614x14001382825101 (text/html)
Fulltext access is included for subscribers to the printed version.

Related works:
Working Paper: Optimal Acquisition Strategies in Unknown Territories (2014)
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:mhr:jinste:urn:sici:0932-4569(201409)170:3_406:oasiut_2.0.tx_2-x

Ordering information: This journal article can be ordered from
Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

DOI: 10.1628/093245613X14001382825101

Access Statistics for this article

Journal of Institutional and Theoretical Economics (JITE) is currently edited by Gerd Mühlheußer and Bayer, Ralph-C

More articles in Journal of Institutional and Theoretical Economics (JITE) from Mohr Siebeck, Tübingen
Bibliographic data for series maintained by Thomas Wolpert ().