The Deterring Role of the Medium of Payment in Takeover Contests: Theory and Evidence from the UK

The deterring role of the medium of payment in a takeover contest is analyzed from the point of view of the bidder. Cash, debt and equity are considered as alternative mediums of payment, and the bidder equilibrium strategies are specified following the Perfect Bayesian Equilibrium requirements for a signaling game. The model predicts notably that cash offers signal a high-valuing bidder, strongly determined to acquire the target firm.

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Year of publication:	1998
Authors:	Cornu, P. ; Isakov, D.
Institutions:	Geneva School of Economics and Management, Université de Genève
Subject:	TAKEOVERS \| COMPETITION

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Series:	Ecole des Hautes Etudes Commerciales, Universite de Geneve-.
Type of publication:	Book / Working Paper
Notes:	26 pages
Classification:	G34 - Mergers; Acquisitions; Restructuring; Corporate Governance ; C72 - Noncooperative Games
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005779579