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Corporate Takeovers in the Laboratory When Shareholders Own More Than One Share

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  • Cadsby, C Bram
  • Maynes, Elizabeth

Abstract

Tendering decisions of shareholders endowed with multiple shares are studied in the laboratory to test game-theoretic models of the tendering process. Tendered shares cycle around the equilibrium level. Contrary to game-theoretic predictions, bid level and bid type affect the number of shares tendered and the bid success rate. When players are given unequal endowments of shares, an equal proportion strategy organizes the data better than B. Holmstrom and B. Nalebuff's (1992) symmetric focal equilibrium in which larger shareholders tender down to a common share level. However, large shareholders often tender proportionately more shares than small shareholders. Copyright 1998 by University of Chicago Press.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Business.

Volume (Year): 71 (1998)
Issue (Month): 4 (October)
Pages: 537-72

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Handle: RePEc:ucp:jnlbus:v:71:y:1998:i:4:p:537-72

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Web page: http://www.journals.uchicago.edu/JB/

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Cited by:
  1. Fausto Panunzi & Denis Gromb & Mike Burkart, 2005. "Minority Blocks And Takeover Premia," FMG Discussion Papers, Financial Markets Group dp544, Financial Markets Group.
  2. Scott Barrett, 2007. "The Smallpox Eradication Game," Public Choice, Springer, Springer, vol. 130(1), pages 179-207, January.
  3. Bram Cadsby, C. & Maynes, Elizabeth, 2005. "Gender, risk aversion, and the drawing power of equilibrium in an experimental corporate takeover game," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 56(1), pages 39-59, January.
  4. Ann B. Gillette & Thomas H. Noe, 2000. "If at first you don't succeed: an experimental investigation of the impact of repetition options on corporate takeovers," Working Paper, Federal Reserve Bank of Atlanta 2000-9, Federal Reserve Bank of Atlanta.

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