A Theory of the Role of Medium of Exchange in Mergers and Acquisitions
Description:
An acquisition bid is like any other proposal for risky investment. The difference arises due to additional source of risk arising from two different sources of information asymmetry due to private knowledge held by the bidder and target. We hypothesize that the bidding process evolves in a manner to optimize bidder's investment in the target through a process of joint signalling. Medium of exchange and bid premium are used as the two signal elements simultaneously by the bidder. We develop a m…
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Date:
May 1994
Creator:
Tiwari, Rajesh Kumar
Partner:
UNT Libraries