Strategic Nondisclosure in Takeovers

• 成果类型: Article
• 署名作者: Li, Jing; Liu, Tingjun; Zhao, Ran
• 署名单位: University of Hong Kong; Peking University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2020-0114
• 发表日期: 2021
• 页码: 345-370
• 关键词: Disclosure policy; INFORMATION; auctions; PRIVATE; valuation; QUALITY; mergers; MARKET; shops

摘要

We examine takeover auctions when an informed bidder has better information about the target value than a rival and target shareholders. The informed bidder's information is either hard or soft, and only hard information can be credibly disclosed. We show that withholding information creates a winner's curse, thereby serving as a preemption device that deters the rival's participation. In turn, an endogenous disclosure cost arises that induces the informed bidder to optimally withhold favorable information to minimize the acquisition price-breaking down the standard unraveling result, even if his information is always hard. Perhaps surprisingly, stronger competition from the uninformed bidder can reduce the target shareholders' payoff and increase the payoff of the informed bidder while unambiguously improving social welfare. Moreover, hardened'' information can reduce the gains to trade, decreasing welfare, but increasing shareholders' payoff. Our results provide a cautionary note to promoting more competition and more disclosure.