Why do Shareholders Allow Their Managers to be Gatekeepers in Corporate Control Contests?
- Authors
- Park, Kyung Suh
- Issue Date
- 12월-2008
- Publisher
- KOREAN SECURITIES ASSOC
- Keywords
- Takeover Method; Merger; Tender Offer; Takeover Premium; Agency Problem
- Citation
- ASIA-PACIFIC JOURNAL OF FINANCIAL STUDIES, v.37, no.6, pp.1065 - 1090
- Indexed
- SCIE
SCOPUS
- Journal Title
- ASIA-PACIFIC JOURNAL OF FINANCIAL STUDIES
- Volume
- 37
- Number
- 6
- Start Page
- 1065
- End Page
- 1090
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/122278
- DOI
- 10.1111/j.2041-6156.2008.tb00003.x
- ISSN
- 1226-1165
- Abstract
- This paper formulates a theoretical model to explain why target shareholders under corporate control contests allow their managers to play the role of a gatekeeper despite the conflicting incentive of the managers to resist takeover attempts that might increase firm value. The paper claims that sometimes the existence of a manager with a conflicting goal can contribute to enhancing the welfare of his shareholders under a corporate control contest where bidders have the choice of takeover methods. We set up a game-theoretical model and derive a separating equilibrium where bidders with higher synergy prefer a tender offer to a merger, and the bidders are forced to pay higher takeover premium in a hostile tender offer due to the existence of informed target managers who can make counteroffers under a merger deal.
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Collections - Korea University Business School > Department of Business Administration > 1. Journal Articles
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