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Corporate Takeovers in the Laboratory when Shareholders Own More than One Share

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  • Cadsby, C.B.
  • Maynes, E.

Abstract

We study the tendering decisions of shareholders endowed with multiple shares to test game-theoretic models of the tendering process in the laboratory. An equilibrium outcome in which value-increasing takeovers always just succeed fails to emerge. Rather, tendered shares cycle around the equilibrium level with successful takeovers occuring more often toward the end of each game. Although game-theoretic results predict that neither bid level nor bid type should affect the number of shraes tendered nor the extent to which bids succeed, bith factors are found to be significant, albeit less so as each game draws to a close.

Suggested Citation

  • Cadsby, C.B. & Maynes, E., 1998. "Corporate Takeovers in the Laboratory when Shareholders Own More than One Share," Working Papers 1998-3, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:1998-3
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    References listed on IDEAS

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    1. Reilly, Barry & Witt, Robert, 1998. "Petrol price asymmetries revisited," Energy Economics, Elsevier, vol. 20(3), pages 297-308, June.
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    Cited by:

    1. Mike Burkart & Denis Gromb & Fausto Panunzi, 2006. "Minority Blocks and Takeover Premia," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(1), pages 32-49, March.
    2. Federica Alberti & Edward J. Cartwright, 2016. "Full agreement and the provision of threshold public goods," Public Choice, Springer, vol. 166(1), pages 205-233, January.
    3. 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," FRB Atlanta Working Paper 2000-9, Federal Reserve Bank of Atlanta.
    4. Scott Barrett, 2007. "The Smallpox Eradication Game," Public Choice, Springer, vol. 130(1), pages 179-207, January.
    5. Edward Cartwright & Anna Stepanova, 2017. "Efficiency in a forced contribution threshold public good game," International Journal of Game Theory, Springer;Game Theory Society, pages 1163-1191.
    6. 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, vol. 56(1), pages 39-59, January.

    More about this item

    Keywords

    TAKEOVERS ; GAME THEORY ; SHARES;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • G3 - Financial Economics - - Corporate Finance and Governance

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