Signalling Equilibria in Takeovers under Risk Aversion
Speaker: Diego Carraso Novoa
Affiliation: University of Queensland
Location: Room 629, School of Economics Boardroom, Level 6, Colin Clark Building (#39), UQ St Lucia Campus or,
Via Zoom link: https://uqz.zoom.us/j/84030975989
Abstract
We analyse takeover operations in which (i) bidding firms are risk averse; (ii) offers can be made using cash or equity stakes; and (iii) acquirers have asymmetric information. We consider both non-competition operations, where a single acquirer initiates the takeover, and competitive operations in which the target organizes an informal auction across potential bidders. We provide conditions for the existence of a pooling and separating equilibrium under both scenarios and characterize the optimal structure of offers. Additionally, we show the existence of a separating equilibrium under competition in which firms differentiate in their payment methods to take advantage of the asymmetries in information, which is consistent with the empirical evidence.
About the presenters meeting
If you would like to have a one-on-one meeting with Diego, please email your availability to: d.carrasconovoa@uq.edu.au.
About Economic Theory Seminar Series
A seminar series designed specifically for economic theory researchers to network and collaborate.
