OPTION GAMES, ASYMMETRIC INFORMATION AND MERGER ANNOUNCEMENT RETURNS

Hongbo Pan and Xinping Xia
Additional contact information
Hongbo Pan: School of Management, Huazhong University of Science and Technology, 1037 Luoyu Road, Wuhan, Hubei Province, P.R. China, 430074, P.R. China
Xinping Xia: School of Management, Huazhong University of Science and Technology, 1037 Luoyu Road, Wuhan, Hubei Province, P.R. China, 430074, P.R. China

Chapter 10 in Advances in Doctoral Research in Management, 2006, pp 211-219 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThis paper presents a dynamic model of mergers based on stock market valuations of merging firms with industry-wide uncertainty. The model incorporates asymmetric information and determines the terms and timing of mergers by solving cooperative option games between acquiring shareholders and target shareholders. The model predicts that (1) returns to acquiring shareholders can be negative if the managers of participants are much more optimistic over merging synergism than outside investors; (2) returns to acquiring shareholders are negatively correlated with the size of the acquirer; (3) returns to target shareholders are negatively correlated with the size of the target.

Keywords: Doctoral; Research; Management Methodology; Data; Analysis; Paradigm; Modeling; International (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789812707246_0010 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789812707246_0010 (text/html)
Ebook Access is available upon purchase.

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:wsi:wschap:9789812707246_0010

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().