Please use this identifier to cite or link to this item:
https://hdl.handle.net/2440/108972
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Type: | Journal article |
Title: | Optimal acquisition strategies in unknown territories |
Author: | Koska, O. Staehler, F. |
Citation: | Journal of Institutional and Theoretical Economics, 2014; 170(3):406-426 |
Publisher: | Mohr Siebeck |
Issue Date: | 2014 |
ISSN: | 0932-4569 |
Statement of Responsibility: | Onur A. Koska and Frank Stähler |
Abstract: | We investigate the optimal acquisition strategy of an investor who wants to acquire a target firm under incomplete information. The response to acquisition offers signals firm productivity, affecting future competition. We identify a competition effect (firms compete for acquisition) and a revelation effect (firms signal productivity). These effects reduce the rejection profits and increase the acceptance probability. If the investor makes simultaneous offers, the revelation effect is a potential threat: a firm may signal low productivity, but may not be acquired. If, however, the investor makes offers sequentially, this threat does not exist, making sequential offers the optimal acquisition strategy. |
Rights: | © 2014 Mohr Siebeck |
DOI: | 10.1628/093245614X14001382825101 |
Published version: | http://dx.doi.org/10.1628/093245614x14001382825101 |
Appears in Collections: | Aurora harvest 8 Economics publications |
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RA_hdl_108972.pdf Restricted Access | Restricted Access | 224.83 kB | Adobe PDF | View/Open |
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