A theory of takeovers and disinvestment
By: Bart M. Lambrecht, Stewart C. Myers.
Contributors: Myers, Stewart C.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11082; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11082.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Consolidation and merger of corporations -- Mathematical models.; Disinvestment -- Mathematical models.
Description: "We present a real-options model of takeovers and disinvestment in declining industries.  As product demand declines, a first-best closure level is reached, where overall value is maximized by shutting down the .rm and releasing its capital to investors.  Absent takeovers, managers of unlevered firms always abandon the firm%u2019s business too late.  We model the managers%u2019 payout policy absent takeovers and consider the effects of golden parachutes and leverage on managers%u2019 shut-down decisions.  We analyze the effects of takeovers of under-leveraged firms.  Takeovers by raiders enforce first-best closure.  Hostile takeovers by other firms occur either at the first-best closure point or too early.  We also consider management buyouts and mergers of equals and show that in both cases closure happens inefficiently late"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 1/27/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.