English, Article, Journal or magazine article edition: Acquisitions as a real options bidding game H. T.J. SMIT; W. A. VAN DEN BERG; W. DE MAESENEIRE

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Bookmark: http://trove.nla.gov.au/version/15117
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Acquisitions as a real options bidding game
Author
  • H. T.J. SMIT
  • W. A. VAN DEN BERG
  • W. DE MAESENEIRE
Physical Description
  • preprint
Notes
  • This paper uses a unified treatment of real options and game theory to examine the occurrence of bidding contests within a competitive environment of imperfect information and asymmetric bidders. Competing potential buyers may sequentially perform due diligence and incur costs (option premium) to become informed about their firm-specific target value (underlying value) before making a bid (exercise price). The first player’s bid reveals a signal on its own and the rival’s target value, thereby affecting the value of the rival’s option to bid on the target and the probability of a bidding contest. We find that bidding contests are more likely to take place between moderately correlated buyers, whereas rather diverse or just very similar buyers are less likely to compete.
  • RePEc:rug:rugwps:05/​289
Language
  • English
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