Managerial incentives for takeovers
AbstractThe paper studies managerial incentives in a model where managers choose product market strategies and make takeover decisions. The equilibrium contract includes an incentive to increase the firm's sales, under either quantity or price competition. This result contrasts with previous findings in the literature, and hinges on the fact that when managers are more aggressive, rival firms earn lower profits and thus are willing to seU out at a lower price. However, as a side-effect of such a contract, the manager might undertake unprofitable takeovers.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1996-22.
Length: 28 pages
Date of creation: Jan 1996
Date of revision:
Publication status: Published by Ivie
Incentives; takeovers; merger profitability;
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