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Information in Tender Offers With a Large Shareholder

Author

Listed:
  • Mehmet Ekmekci
  • Nenad Kos
Abstract
We study takeovers of firms whose ownership structure is a mixture of minority block‐holders and small shareholders. We show that the combination of dispersed private information on the side of small shareholders and the presence of a large shareholder can facilitate profitable takeovers. Furthermore, our analysis implies that even if some model of takeovers predicts a profit for the raider, for example, due to private benefits, the profit will be underestimated unless the large shareholder and the dispersion of information among the small shareholders are modeled.

Suggested Citation

  • Mehmet Ekmekci & Nenad Kos, 2016. "Information in Tender Offers With a Large Shareholder," Econometrica, Econometric Society, vol. 84, pages 87-139, January.
    • Handle: RePEc:wly:emetrp:v:84:y:2016:i::p:87-139
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    References listed on IDEAS

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    1. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, April.
    2. Harrington, Joseph E, Jr & Prokop, Jacek, 1993. "The Dynamics of the Free-Rider Problem in Takeovers," The Review of Financial Studies, Society for Financial Studies, vol. 6(4), pages 851-882.
    3. 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.
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    7. Francesca Cornelli & David D. Li, 2002. "Risk Arbitrage in Takeovers," The Review of Financial Studies, Society for Financial Studies, vol. 15(3), pages 837-868.
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    10. repec:bla:jfinan:v:59:y:2004:i:3:p:1325-1344 is not listed on IDEAS
    11. Greenwood, Robin & Schor, Michael, 2009. "Investor activism and takeovers," Journal of Financial Economics, Elsevier, vol. 92(3), pages 362-375, June.
    12. Mark Bagnoli, Barton L. Lipman, 1988. "Successful Takeovers without Exclusion," The Review of Financial Studies, Society for Financial Studies, vol. 1(1), pages 89-110.
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    Cited by:

    1. Marco Pagnozzi & Antonio Rosato, 2014. "Entry by Takeover: Auctions vs. Negotiations," CSEF Working Papers 353, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    2. Liu, Tingjun & Bernhardt, Dan, 2024. "Auctioning control and cash-flow rights separately," The Warwick Economics Research Paper Series (TWERPS) 1516, University of Warwick, Department of Economics.
    3. Mike Burkart & Samuel Lee, 2022. "Activism and Takeovers," The Review of Financial Studies, Society for Financial Studies, vol. 35(4), pages 1868-1896.
    4. Mehmet Ekmekci & Nenad Kos & Rakesh Vohra, 2016. "Just Enough or All: Selling a Firm," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 223-256, August.
    5. Alp E. Atakan & Mehmet Ekmekci, 2021. "Market Selection and the Information Content of Prices," Econometrica, Econometric Society, vol. 89(5), pages 2049-2079, September.
    6. Ordóñez-Calafí, Guillem & Thanassoulis, John, 2020. "Stock selling during takeovers," Journal of Corporate Finance, Elsevier, vol. 60(C).

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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