Essays in mergers and acquisitions
Abstract/Contents
- Abstract
- This dissertation consists of two essays, both studying the informational economics in mergers and acquisitions (M& As). The first essay studies the selling procedures in M& As. The second essay investigates the initiation of M& A deals, and illustrates its implications regarding bid premium. In particular, the first essay compares a seller's revenue in a standard English ascending auction to that in a negotiation with a "go-shop" provision. In the latter, the target privately negotiates with a few bidders, signs a tentative merger agreement with one of them, and then publicly solicits additional bids during a "go-shop" period. Using a theoretical framework, I show that a "go-shop" negotiation generates higher seller revenue than does an auction, when first, the bidders' costs of learning their valuations are sufficiently high, second, the bidders' valuations are moderately correlated with each other, and third, the bidders' prior probabilities of the existence of gains from trade are sufficiently low. The theoretical results are broadly consistent with empirical evidence, and they provide a novel explanation for the prevalence of "go-shop negotiations" in private equity deals. The second essay, co-authored with Yi Chen, investigates the initiation of M& A deals. In a dynamic model of merger negotiation with two-sided private information and two-sided endogenous initiation, this essay investigates (1) what determines the timing of M& A initiation, (2) who initiates the M& A negotiation, and (3) why bid premia are higher for bidder-initiated deals than target-initiated deals. The key driving force for the results is that the timing of initiation can reveal information about the target's private signal of its stand-alone value, and the bidder's private signal about its valuation for the target's firm. The model predictions are consistent with the empirical literature that emphasizes the role of private information in deal-initiation.
Description
| Type of resource | text |
|---|---|
| Form | electronic; electronic resource; remote |
| Extent | 1 online resource. |
| Publication date | 2017 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Associated with | Wang, Zhe |
|---|---|
| Associated with | Stanford University, Graduate School of Business. |
| Primary advisor | Grenadier, Steven R |
| Thesis advisor | Grenadier, Steven R |
| Thesis advisor | DeMarzo, Peter M |
| Thesis advisor | Vanasco, Victoria |
| Thesis advisor | Zwiebel, Jeffrey |
| Advisor | DeMarzo, Peter M |
| Advisor | Vanasco, Victoria |
| Advisor | Zwiebel, Jeffrey |
Subjects
| Genre | Theses |
|---|
Bibliographic information
| Statement of responsibility | Zhe Wang. |
|---|---|
| Note | Submitted to the Graduate School of Business. |
| Thesis | Thesis (Ph.D.)--Stanford University, 2017. |
| Location | electronic resource |
Access conditions
- Copyright
- © 2017 by Zhe Wang
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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