Information in Tender Offers With a Large Shareholder
Econometrica · 2016 · Volume 84 · Issue 1
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.
Keywords
Takeovers, tender offers, lemons problem, large shareholder, blockholders
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