If at First You Don't Succeed: The Effect of the Option to Resolicit on Corporate Takeovers
Posted: 29 Feb 2008
Date Written: 2006
Abstract
This article models, and experimentally simulates, the free-rider problem in a takeover when the raider has the option to "resolicit," that is, to make a new offer after an offer has been rejected. In theory, the option to resolicit, by lowering offer credibility, increases the dissipative losses associated with free riding. The outcomes of our experiment support this prediction and produce losses from free riding even higher than theoretically predicted. These dissipation losses reduce raider gains to less than 3% of synergy value of the acquisition
Suggested Citation: Suggested Citation
Gillette, Ann Brewer and Noe, Thomas H., If at First You Don't Succeed: The Effect of the Option to Resolicit on Corporate Takeovers ( 2006). The Review of Financial Studies, Vol. 19, Issue 2, pp. 561-603, 2006, Available at SSRN: https://ssrn.com/abstract=900716 or http://dx.doi.org/10.1093/rfs/hhj011
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