indenture an institution for a credible commitment without extortion abstract the aim of kritikos and bolle kritikos a s bolle f journal of economic behavior and organization 34 1998 279 294 was to analyze the institution of the indenture game within today s institutional setting unfortunately holt bases his rejoinder on a historical occurrence with a different institutional context this explains why his rejoinder is inconsistent

indenture a viable contract for a sequential one shot prisoners dilemma a reply to holt abstract holt s argument is wrong a closer look at the structure of the game and at the equilibrium selection criterion shows that mutual co operation is secured in an indenture game

the dispute settlement mechanism of the wto a brief history and an evaluation from economic contractarian and legal perspectives rule based system has to include a mechanism for the enforcement of its rules and a means for settlement of disputes about alleged violation of rules

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

economies of scale and barriers to entry dixit has recently presented a model in which established firms select capacity to discourage entry but cannot employ threats they would not rationally execute after entry entry deterrence in a slight modification of this model involves the classical limit price output under linear or concave demand however the capital cost of a firm of minimum efficient scale is an upper bound on the present value of the monopoly profit stream that can be shielded from entry it is argued that this suggests the general unimportance of entry barriers erected by scale economies

belief based refinements in signalling games abstract there are many economic problems which when modelled as games of incomplete information give rise to many sequential equilibria severely limiting the usefulness of the model there has recently been a large literature devoted to refining the set of equilibria in order to reduce this multiplicity by restricting the set of admissible disequilibrium beliefs this paper argues that the logical foundations of some refinements and the equilibria they focus on are problematic and further proposes an alternative refinement that avoids the difficulties we also provide an existence theorem covering a broad class of signalling games often studied in economics journal of economic literature classification numbers c72 c70 d82

gift giving and the evolution of cooperation gift giving is a practice common to many societies in an evolutionary model the social custom of giving gifts at the beginning of a relationship can lead to trust and cooperation the evolutionary approach makes predictions about the character of the goods that can be used as gifts for example gift goods may have little use value even at low levels of consumption although the gifts themselves are useless the institution is not

does the form of compensation matter abstract the role of fee contracts in the agency relation between investment bankers and client firms in tender offers is investigated using a sample of offers between 1978 and 1986 different fees have different payoff functions which can be used by firms to create incentives and by bankers to signal differences in abilities the effectiveness of fee contracts in resolving agency problems in tested with mixed results the evidence suggests that fee contracts are used as a tool by both firms and bankers and that contracts influence tender offer outcomes but that contracting is only a partial solution to the agency problem

is the glass steagall act justified a study of the u s experience with universal banking before the glass steagall act of 1933 removed commercial banks from the securities underwriting business we evaluate the argument for the separation of commercial and investment banking that conflicts of interest induce commercial banks to fool the public into investing in securities which turn out to be of low quality a comparison of the performance of securities underwritten by commercial and investment banks prior to the act shows no evidence of this instead the public appears to have rationally accounted for the possibility of conflicts of interest and this appears to have constrained the banks to underwrite high quality securities jel g21 g24 n22

corporate control and the choice of investment financing the case of corporate acquisitions we test the proposition that corporate control considerations motivate the means of investment financing cash and debt or stock corporate insiders who value control will prefer financing investments by cash or debt rather than by issuing new stock which dilutes their holdings and increases the risk of losing control our empirical results support this hypothesis in corporate acquisitions the larger the managerial ownership fraction of the acquiring firm the more likely the use of cash financing also the previously observed negative bidders abnormal returns associated with stock financing are mainly in acquisitions made by firms with low managerial ownership do firms have systematic preferences for the means of financing investments in modigliani and miller s 1958 m m s perfect market no tax world the means by which investments are financed are irrelevant for the total value of the firm miller 1977 extended this irrelevance proposition to a case where taxes exist however casual observation suggests that firms are not indifferent to the means of financing for example many firms prefer to finance investments from internal sources or by debt rather than by issuing new equity an explanation for such systematic financing preferences and the consequent capital structure of firms is therefore called for indeed a number of such explanations have been advanced for example deangelo and masulis 1980 showed that in miller s 1977 framework the means of financing is not irrelevant if firms have different expected marginal effective tax rates due to differences in fixed charges it has also been argued that financing preferences may result from agency costs associated with debt e g barnea haugen and senbet 1981 or from asymmetry of information between managers and outside investors myers and majluf 1984 recently harris and raviv 1988 and stulz 1988 advanced a new argument for the existence of financing preferences that centers around managers incentive to maintain control over the corporation specifically by increasing debt and using the proceeds to retire equity held by the public owners managers increase the probability of maintaining control and reaping the benefits associated with it since the substitution of debt for outsiders equity decreases the fraction of

explaining interfirm cooperation and performance toward a reconciliation of predictions from the resource based view and organizational economics interfirm cooperation and its performance implications are examined in the context of two widely cited theoretical approaches to organizations broadly speaking the resource based view suggests that firms seek to capitalize on and increase their capabilities and endowments whereas organizational economics asserts that firms focus on minimizing the costs of organizing although these perspectives agree on managers likely actions in many areas their predictions diverge when interfirm cooperation is considered we take a step toward reconciling these differences by positing that firms place resource based concerns in front of considerations from organizational economics when deciding whether or not to engage in interfirm cooperation we examined this prediction using data from 94 publicly held restaurant chains the results support our integrated view but also suggest that giving primacy to resource concerns detracts from the performance of some firms we derive several implications of these findings in an effort to guide subsequent inquiry copyright 1999 john wiley sons ltd

why corporations insure corporations insure to reduce the shirking information problem of joint production insurance encourages specialization in ownership increasing the returns to monitoring and lowering shareholders demand for a more diversified portfolio it enhances the credibility of specific capital as a performance bond and it lowers the cost to shareholders of compensating other members of the team for investing in firm specific assets tax and other factors may further encourage individual corporations to insure

managerialism ownerism and risk abstract this paper proposes that managers having the value of their human capital dependent on the performance of the firm they manage and being unable to diversify away this risk are expected to attempt to reduce their employment risk internally by project selection or by income smoothing intended to stabilize the firm s income stream an empirical investigation shows that manager controlled firms exercise income smoothing to a greater extent than owner controlled firms have relatively lower unsystematic risk and perhaps lower systematic risk

bank underwriting of debt securities modern evidence this article examines debt securities underwritten by section 20 subsidiaries of bank holding companies relative to those underwritten by investment houses consistent with a net certification effects for banks bank underwriting of lower credit rated firms to whom the bank lends results in relatively higher prices lower yields we find no evidence of conflicts of interest even when an issue is used to repay bank debt further banks bring a relatively larger proportion of small issues to the market contrary to the contention that universal banking stunts availability of finance to small firms bank underwritings appear to benefit small firms article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

what s different about banks abstract negotiable certificates of deposit cd s trade in the capital market in competition with other securities like commercial paper and bankers acceptances if cd s must pay lenders competitive monetary interest the reserve tax on cd s is borne by bank borrowers viability of the tax means there must be something special about bank loans that makes some borrowers willing to pay higher interest rates than those on other securities of equivalent risk moreover there must be something special about banks that prevents other intermediaries from competing to assure that it never pays to finance loans with cd s

hostages as a commitment device a game theoretic model and an empirical test of some scenarios abstract hostage posting is a mechanism of cooperation in social and economic relations with incentive problems a game theoretic model of hostage posting as a commitment device is presented cooperation via hostage posting is individually rational if it is supported by a subgame perfect equilibrium maximin properties of such equilibria are also considered predictions derived from the model were tested in several experiments results support the empirical significance of subgame perfect equilibria and of maximin strategies the institution of hostages is an ancient technique that deserves to be studied by game theory as does the practice of drinking wine from the same glass or of holding gang meetings in places so public that neither side could escape if it subjected the other to massacre schelling 1960 p 135

long term sustainability of third party facilitated market linkages evidence from the usda marketing assistance program in the armenian dairy industry abstract public private partnerships are increasingly seen as an important tool to build agri food supply chains and develop markets for agri food products in emerging economies however many of these initiatives fail when the public component of the program ends one exception is the usda market assistance program map that facilitated the redevelopment of the armenian dairy sector after privatization this paper presents a case study of this initiative and hypothesize that the usda map facilitated farmer investment in private enforcement capital this investment resulted in sustainable market relationships between farmers and dairy processors even after the usda map expired we find empirical evidence to support this hypothesis using a panel dataset collected from 172 armenian dairy farmers in 2004 and 2009

loan underpricing and the provision of merger advisory services abstract this paper investigates the primary and secondary syndicated bank loan market to analyze the effect on pricing when the financial institution commingles syndicated lending with merger advisory services in particular we investigate the connection between the acquirer s choice of financial advisor in a merger and future financing commitments we find evidence of underpricing of syndicated bank loans in both the primary and secondary market in the primary market we show that non acquisition loans granted by merger advisors to acquiring firms after the merger announcement date are charged a lower all in spread relative to acquisition loans if there has been a prior lending relationship consistent with this finding we find that syndicated bank loans for non acquisition purposes arranged by the acquirer s advisor after the merger announcement date trade in the secondary market at a significant discount since the terms on these non acquisition loans are not set upon merger announcement they are most subject to risk shifting and underpricing agency problems these findings offer evidence consistent with the existence of loss leader and potentially conflicted loans priced at below market terms that are offered by the acquirer s relationship bank advisor in order to win merger advisory business

how to deliver foreign aid the case of projects governed by the spanish international agency summary international agencies use two alternative modes of governance to deliver international aid projects under bilateral agreements with recipient governments in house or through incumbent ngos through the lenses of institutional and transaction cost economics this article examines 95 international aid projects delivered in morocco and ecuador by the spanish international agency finding that those projects delivered in house present different features than those projects outsourced through incumbent ngos specifically international aid projects delivered in house involve important investments in specific assets are much more complex and can turn the public agency into a hostage of its own disbursement

muslim family law prenuptial agreements and the emergence of dowry in bangladesh we explain trends in dowry levels in bangladesh by drawing attention to an institutional feature of marriage contracts previously ignored in the literature the mehr or traditional islamic brideprice we develop a model of marriage contracts in which mehr serves as a barrier to husbands exiting marriage and a component of dowry as an amount that ex ante compensates the groom for the cost of mehr we investigate how mehr and dowry respond to exogenous changes in the costs of polygamy and divorce and show that our model gives a dierent set of predictions than traditional models we show that major changes in dowry levels took place precisely after the legal changes corresponding to simultaneous changes in levels of mehr

the role of bank advisors in mergers and acquisitions this paper looks at the role of commercial banks and investment banks as financial advisors in their role as lenders and advisors banks can be viewed as serving a certification function however banks acting as both lenders and advisors face a potential conflict of interest that may mitigate or offset any certification effect overall we find evidence of a net certification effect for target firms but conflicts of interest for acquirers in particular target firms earn higher abnormal returns when the target s own bank is hired as merger advisor consistent with the bank s role as certifier of the more informationally opaque target s value to the acquirer in contrast we find no net certification role for acquirers there are at least two possible reasons for this first certification of value may be less important for acquirers because it is the target firm that must be priced in a merger second acquirers may utilize commercial bank advisors in order to obtain access to bank loans to finance activities in the postmerger period thus an acquirer may choose its own bank with whom it has had a prior lending relationship as an advisor in a merger however this choice weakens the certification effect and creates a potential conflict of interest because the advisor s merger advice may be distorted by considerations related to the bank s past and future lending activity

economic interests and regional trading arrangements the case of nafta this article examines lobbying in the united states on the north american free trade agreement nafta i argue that economies of scale and production sharing across borders create incentives for firms to seek regional trade liberalization statistical analysis demonstrates that sectors with these characteristics were more likely to lobby for free trade in north america these sectors were also exposed to free trade more rapidly under the tariff phasing schedule in the nafta treaty however corporate restructuring to rescale production for the regional market and to increase offshore assembly presented adjustment costs for u s workers which created divisions between labor unions and their employers i conclude that regional arrangements are an attractive mechanism to liberalize trade for firms in need of larger than national markets to take advantage of economies of scale or to develop production sharing networks

efficient investments in the implementation problem abstract this paper identifies a condition for an efficient social choice rule to be fully implementable when we take into account investment efficiency to do so we extend the standard implementation problem to include endogenous ex ante and ex post investments in our problem the social planner aims to achieve efficiency in every equilibrium of a dynamic game in which agents strategically make investments before and after playing the mechanism our main theorem shows that a novel condition commitment proofness is sufficient and necessary for an efficient social choice rule to be implementable in subgame perfect equilibria the availability of ex post investments is crucial in our model there is no social choice rule that is efficient and implementable in subgame perfect equilibria without ex post investments we also show that our positive result continues to hold in the incomplete information setting

indenturing banknotes as a mechanism to induce cooperation in conflict games abstract a principal wants an agent to do something for him but does not want to pay him the agent wants to get the money but does not want to work for it how can the socially efficient result of working and paying be achieved if no enforceable contract can be concluded and the game is played only once a class of one shot games indenture games is analyzed where efficient behaviour is the unique stable equilibrium

rejoinder to kritikos and bolle making indenture viable the extortionary power of pre commitment in iterated prisoner s dilemma abstract kritikos and bolle s approach is still flawed but a viable indenture game can still readily be structured within the context of iterated prisoner s dilemma

corporate takeover bids methods of payment and bidding firms stock returns this study explores the role of the method of payment in explaining common stock returns of bidding firms at the announcement of takeover bids the results reveal significant differences in the abnormal returns between common stock exchanges and cash offers the results are independent of the type of takeover bid i e merger or tender offer and of bid outcomes these findings supported by analysis of nonconvertible bonds are attributed mainly to signalling effects and imply that the inconclusive evidence of earlier studies on takeovers may be due to their failure to control for the method of payment recent studies on corporate takeovers provide inconclusive results on the valuation effects of acquisitions on the common stock of bidding firms 1 substantial differences are reported between the studies that analyze acquisitions initiated as tender offers and those that confine their samples to merger proposals the existence of mixed empirical findings for the bidding firms makes it difficult to interpret existing evidence and to draw conclusions about the managers acquisition motivations nevertheless the reason for the substantial difference between empirical findings on mergers and tender offers still remains an unresolved issue it is observed however that mergers are usually common stock exchange offers whereas tender offers are usually cash offers given that different methods of financing a project have different signalling implications myers and majluf 39 the differential stock returns of bidders in mergers and tender offers may be due to the method of acquisition financing

cross function and same function alliances how does alliance structure affect the behavior of partnering firms firms collaborate to develop and deliver new products these collaborations vary in terms of the similarity of the competencies that partnering firms bring to the alliance in same function alliances partnering firms have similar competencies whereas in cross function alliances partners have very different competencies on examining managers view of these alliances we find that on average same function alliances are expected to perform better than cross function alliances holding fixed the level of inputs a game theoretic analysis shows that this apprehension about cross function alliances is consistent with a pareto inferior equilibrium a pareto superior equilibrium however suggests that partners in cross function alliances may invest more in their alliances than those in same function alliances it is also often believed that increasing the number of partnering firms is not conducive for collaborative effort our analysis shows that this belief is correct for same function alliances but not for cross function alliances we test these equilibrium predictions in an experiment where we exogenously vary the type of alliance and the number of partnering firms the experimental results lend support for the pareto superior equilibrium partners in cross function alliances invested more than their counterparts in same function alliances and this difference in investment levels increased with the number of partnering firms we extend our model to consider alliances where firms have an opportunity to learn from their partners and later leverage this knowledge outside the scope of their alliance though such learning increases the resources committed by alliance partners in the learning phase it decreases investment in the subsequent competition and also dampens the overall investment across the two stages in addition an increase in interalliance competition decreases investments in the focal alliance but increases investment in the competition outside the scope of the alliance

investment banking contracts in tender offers abstract empirical analysis reveals that investment banker advisory fees in tender offers average 1 29 of the value of a completed transaction far below the levels often alluded to in the business press most fees are contingent on offer outcome with target firm fees typically contingent on transaction value and bidding firm fees on the number of shares purchased although these contingent contracts motivate investment bankers to satisfy some client objectives many also create conflicts of interest between banker and firm these incentive problems are apparent in offer evaluation in hostile offers and in the price paid by bidding firms

the long term default performance of bank underwritten security issues abstract the glass steagall act of 1933 barred commercial banks and their affiliates from underwriting and dealing in securities activities amidst concerns that banks abused the trust of their depositors and clientele by systematically underwriting poor quality security issues this paper examines if these concerns were justified by studying the long term default performance of bank underwritten issues as compared to non bank underwritten issues the evidence shows that contrary to conventional wisdom bank underwritten issues defaulted less than non bank underwritten issues over a seven year period from the issue date and had a significantly lower mortality rate

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

leniency policies and illegal transactions abstract we study the consequences of leniency reduced legal sanctions for wrongdoers who spontaneously self report to law enforcers on sequential bilateral illegal transactions such as corruption manager auditor collusion or drug deals it is known that leniency helps deterring illegal relationships sustained by repeated interaction here we find that when not properly designed leniency may simultaneously provide an effective governance mechanism for occasional sequential illegal transactions that would not be feasible in its absence

information reusability competition and bank asset quality this paper explains the recent decline in bank asset quality using the notion of information reusability banks are viewed as information processors they exist because of their advantage in extracting the surplus associated with the reusability of borrower specific information it is shown that a bank s incentive to screen loan applicants and hence maintain the quality of its assets depends on the surplus this screening can produce which in turn depends on information reusability two recent changes in banks operating environment are increased competitition and greater temporal volatility in borrower credit risks the former has directly reduced banks informational surplus while the latter has impaired information reusability hence screening expenditures have been reduced and the diminution of screening has lowered the quality of bank assets it is also shown that an increase in deposit insurance premia has an effect similar to that of narrowing interest spreads and therefore will result in reduced asset screening and impaired asset quality

modes of foreign entry a transaction cost analysis and propositions a frontier issue in international marketing is the appropriate choice of entry mode in foreign markets the objective of this paper is to offer a transaction cost framework for investigating the entry mode decision this framework provides 1 a theoretical basis for systematically interrelating the literature into propositions 2 propositions about interactions which resolve the apparently contradictory arguments advanced to date specifically the paper illustrates the feasibility of clustering 17 entry modes into the degree of control the mode provides the entrant proposes that the most appropriate i e most efficient entry mode is a function of the tradeoff between control and the cost of resource commitment advances testable propositions delimiting the circumstances under which each mode maximizes long term efficiency

the antecedents and performance implications of cooperative exchange norms our study investigates the antecedents and performance implications of cooperative exchange norms we argue that in early relationships the level of expected cooperative norms in an exchange is the result of a calculative process facilitated by transaction attributes joint transaction specific investments and observability the greater the level of these two exchange attributes the greater the level of cooperative exchange norms all else being equal we further argue that the realized level of cooperative exchange norms can deviate from the expected level because the development of such norms is the result of social processes that management cannot directly and fully control this gap between realized and expected norms affects exchange performance performance suffers when the realized level of cooperative exchange norms falls below the expected level but overshooting expectations lays a critical groundwork for repeat transactions the analysis of a survey of 182 collaborative r d alliances provides initial support for our theory

conflict of interest and the credibility of underwriter analyst recommendations brokerage analysts frequently comment on and sometimes recommend companies that their firms have recently taken public we show that stocks that underwriter analysts recommend perform more poorly than buy recommendations by unaffiliated brokers prior to at the time of and subsequent to the recommendation date we conclude that the recommendations by underwriter analysts show significant evidence of bias we show also that the market does not recognize the full extent of this bias the results suggest a potential conflict of interest inherent in the different functions that investment bankers perform

the mode of acquisition in takeovers taxes and asymmetric information we develop a model in which the mode of acquisition conveys information concerning the value of the bidder the model incorporates the possibility that offers containing both cash and stock can be made in a setting consistent with the u s tax code we demonstrate that bidders with unfavorable private information about their equity value choose offers containing some stock to avoid the capital gains tax consequences of cash offers the model yields a number of unique predictions about the construction of acquisition offers we present evidence consistent with the model when one firm acquires another it can pay for the acquisition with cash stock or a combination of the two recent studies find that announcement returns to bidding firms who make cash offers are higher than when stock offers are made models consistent with this evidence note that as in myers and majluf 1984 a bidder with private information about the value of its assets only offers stock when its shares are overvalued by target shareholders recognizing this adverse selection target shareholders reduce their estimate of the bidder s value thus without some benefit in stock over cash as a means of payment a lemons problem arises for stock offers and bidders only choose cash offers our paper advances the use of stock in an offer through its tax advantages in the united states to realize the benefits available in nontaxable offers an offer must contain at least fifty percent stock thus when the bidder has private information about the value of its assets stock off6rs can still occur because of their tax advantage the intuition is as follows target holders can postpone the realization of capital gains when they receive stock in a takeover so other things equal they demand higher prices in cash takeovers while the offer of stock may have tax advantages the shares swapped are valued by the target as if they were offered by the average bidder making a stock offer thus a pool of higher private valuation bidder types choose cash offers in spite of the tax consequences a pool of lower private valuation types

product complementarities capabilities and governance a dynamic transaction cost perspective the organization and governance of the transactions that comprise a bundling arrangement depend on the distribution of capabilities among firms and the amount of time during which the window of opportunity for earning rents is expected to remain open firms engaged in inter firm collaboration must undertake support transactions related to billing marketing customer support and product repair these support transactions differ from the core transactions that have traditionally been perceived as sufficient to provide a product bundle since support transactions create costs of their own the market may turn out to be an expensive means of governing collaborative arrangements undertaken for bundling purposes the telecommunications service sector provides an illustration copyright 1997 by oxford university press

the underwriting experience of commercial bank affiliates prior to the glass steagall act a reexamination of evidence for passage of the act abstract we examine a major rationale for the passage of the glass steagall act separating commercial and investment banking activities in the u s that these banks abused their superior knowledge by misrepresenting the quality of inferior security issues or passing off bad commercial loans through publicly offered security issues this issue is of current interest even in today s more relaxed environment in the u s and in the universal banking system in europe since there are still lingering doubts that such abuses will not recur in a systematic study of the performance of bond issues underwritten by different classes of underwriters prior to the passage of the glass steagall act we find bank affiliate issue default rates were lower ex ante yields were lower ex post prices were higher and the relative ability of ex ante yields to predict ex post performance no different than investment bank issues the results hold for all categories of bond issues domestic corporate foreign corporate and foreign governments we have also isolated the performance of the bonds underwrit national city company and chase securities corporation which were targets of the pecora hearing these two bank affiliates were found to issue bonds of lesser quality than the other bank affiliates but no worse than those of the investment banks

beware of the watchdog rethinking the normative justification of gatekeeper liability one of the prevailing explanations of the corporate scandals of the enron era and the recent financial crisis is the failure of professional gatekeepers such as auditors corporate lawyers and securities analysts to detect and disrupt corporate misconduct the alleged solution to this failure typically proposed and justified on consequentialist grounds is to impose legal liability on professionals the purpose of this paper is to critically examine the normative foundations of gatekeeper liability in the course of this paper i shall defend the claim that gatekeeper liability may be morally objectionable not only on grounds of fairness but also on consequentialist grounds the expected contribution of this paper is threefold first it systematizes the framing and moral justification of gatekeeping duties second it calls into question the normative underpinnings for targeting intermediaries instead of primary wrongdoers third it anticipates some negative and often overlooked results of gatekeeping strategies in the accounting profession specifically in the realm of clientele selection the expectation gap and auditor compensation

a reexamination of the conglomerate merger wave in the 1960s an internal capital markets view one possible explanation for bidding firms earning positive abnormal returns in diversifying acquisitions in the 1960s is that internal capital markets were expected to overcome the information deficiencies of the less developed capital markets examining 392 bidder firms during the 1960s we find the highest bidder returns when financially unconstrained buyers acquire constrained targets this result holds while controlling for merger terms and for different proxies used to classify firms facing costly external financing we also find that bidders generally retain target management suggesting that management may have provided companyspecific operational information while the bidder provided capital budgeting expertise