IDEAS home Printed from
   My bibliography  Save this article

Takeover Bidding with Signaling Incentives


  • Tingjun Liu


This study examines takeover bidding contests in which privately informed bidders have incentives to signal high values to uninformed investors through their bids. Such incentives could arise in a large number of situations from financing and managerial concerns. The findings show that the dynamic nature of the takeover contests plays a critical role in the signaling process, allowing bidders to signal high values in two ways. Such signaling bears important consequences on the bids, the allocative efficiency, the target's and bidders' profits, as well as the winner's post-takeover stock price performance and volatility. The Author 2011. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail:, Oxford University Press.

Suggested Citation

  • Tingjun Liu, 2012. "Takeover Bidding with Signaling Incentives," Review of Financial Studies, Society for Financial Studies, vol. 25(2), pages 522-556.
  • Handle: RePEc:oup:rfinst:v:25:y:2012:i:2:p:522-556

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Dan Bernhardt & Tingjun Liu & Robert Marquez, 2018. "Targeting Target Shareholders," Management Science, INFORMS, vol. 64(4), pages 1489-1509, April.
    2. Vladimirov, Vladimir, 2015. "Financing bidders in takeover contests," Journal of Financial Economics, Elsevier, vol. 117(3), pages 534-557.
    3. Liu, Tingjun, 2016. "Optimal equity auctions with heterogeneous bidders," Journal of Economic Theory, Elsevier, vol. 166(C), pages 94-123.
    4. Schneck, Colin & Bessler, Wolfgang & Zimmermann, Jan, 2014. "Bidder Contests in International Mergers and Acquisitions: The Impact of Toeholds, Preemptive Bidding, and Termination Fees," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100493, Verein für Socialpolitik / German Economic Association.
    5. Bos, Olivier & Truyts, Tom, 2017. "Auctions with Signaling Concerns," MPRA Paper 79181, University Library of Munich, Germany.
    6. Mike Burkart & Samuel Lee, 2010. "Signaling in Tender Offer Games," FMG Discussion Papers dp655, Financial Markets Group.
    7. Berg, Aron, 2017. "Misvaluation and Financial Constraints: Method of Payment and Buyer Identity in Mergers & Acquisitions," Working Paper Series 1157, Research Institute of Industrial Economics.
    8. Iván Marinovic, 2017. "Delegated Bidding and the Allocative Effect of Accounting Rules," Management Science, INFORMS, vol. 63(7), pages 2181-2196, July.
    9. Olivier Bos & Francisco Gomez-Martinez & Sander Onderstal & Tom Truyts, 2017. "Signaling in auctions: experimental evidence," Working Papers of Department of Economics, Leuven 585499, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    10. Mike Burkart & Samuel Lee, 2015. "Signalling to Dispersed Shareholders and Corporate Control," Review of Economic Studies, Oxford University Press, vol. 82(3), pages 922-962.
    11. Bessler, Wolfgang & Schneck, Colin & Zimmermann, Jan, 2015. "Bidder contests in international mergers and acquisitions: The impact of toeholds, preemptive bidding, and termination fees," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 4-23.
    12. Liu, Tingjun & Bernhardt, Dan, 2019. "Optimal equity auctions with two-dimensional types," Journal of Economic Theory, Elsevier, vol. 184(C).
    13. Aktas, Nihat & Xu, Guosong & Yurtoglu, Burcin, 2018. "She is mine: Determinants and value effects of early announcements in takeovers," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 180-202.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:rfinst:v:25:y:2012:i:2:p:522-556. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.