Does the Free-rider Problem Occur in Corporate Takeovers? Evidence from Laboratory Markets

S. Hirota, Tatsuyoshi Saijo (), Yasuyo Hamaguchi () and T. Kawagoe

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: We explore experimentally whether the free-rider problem occurs in corporate takeovers. While Grossman and Hart's (1980) classical proposition states that due to the free-rider problem takeovers never succeed, we observe a considerable number of successful takeovers in real capital markets. To solve this paradox, we conducted an experimental study by constructing simple laboratory markets of atomistic shareholders.

Date: 2000-01
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:0512

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