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The Deterring Role of the Medium of Payment in Takeover Contests: Theory and Evidence from the U.K

Collection
  • Cahiers de recherche; 1998.16
Publication date1998
Abstract

The deterring role of the medium of payment in a takeover contest is analyzed from the point of view of the bidder. Cash, debt and equity are considered as alternative mediums of payment, and the bidder equilibrium strategies are specified following the Perfect Bayesian Eqilibrium requirements for a signaling game. The model predicts notably that cash offers signal a high-valuing bidder, strongly determinied to acquire the target firm Moreover, cash offers deter competition better than debt or equity offers. The theoretical results are validated with data from the U.K. over 1995-96

Citation (ISO format)
CORNU, Philippe, ISAKOV, Dusan. The Deterring Role of the Medium of Payment in Takeover Contests: Theory and Evidence from the U.K. 1998
Identifiers
  • PID : unige:5892
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Creation04/15/2010 12:21:03 PM
First validation04/15/2010 12:21:03 PM
Update time03/14/2023 3:26:59 PM
Status update03/14/2023 3:26:59 PM
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