Optimal toeholds in takeover contests

• 成果类型: Article
• 署名作者: Goldman, E; Qian, J
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; Boston College
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2004.06.009
• 发表日期: 2005
• 页码: 321-346
• 关键词: toehold; entrenchment; free-rider problem; takeover; tender offer

摘要

We offer an explanation for why raiders do not acquire the maximum possible toehold prior to announcing a takeover bid. By endogenously modeling the target firm's value following an unsuccessful takeover we demonstrate that a raider may optimally acquire a small toehold even if the acquisition does not drive up the pre-tender target price. This occurs because although a larger toehold increases profits if the takeover Succeeds it also conveys a higher level of managerial entrenchment and hence a tower firm value if the takeover fails. We derive new predictions regarding the optimal toehold and target value following a failed takeover. We also examine the impact of a rival bidder and dilution. (c) 2005 Elsevier B.V. All rights reserved.