TY - JOUR
T1 - Bidder discounts and target premia in takeovers
AU - Jovanovic, Boyan
AU - Braguinsky, Serguey
PY - 2004/3
Y1 - 2004/3
N2 - On news of a takeover, the sum of the stock market values of the firms involved often falls, and the value of the acquirer almost always does. Does this mean that takeovers do not raise the values of the firms involved? Not necessarily. We set up a model in which the equilibrium number of takeovers is constrained efficient. Yet upon news of a takeover, a target's price rises, the bidder's price falls, and most of the time the joint value of the target and acquirer also falls.
AB - On news of a takeover, the sum of the stock market values of the firms involved often falls, and the value of the acquirer almost always does. Does this mean that takeovers do not raise the values of the firms involved? Not necessarily. We set up a model in which the equilibrium number of takeovers is constrained efficient. Yet upon news of a takeover, a target's price rises, the bidder's price falls, and most of the time the joint value of the target and acquirer also falls.
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U2 - 10.1257/000282804322970698
DO - 10.1257/000282804322970698
M3 - Article
AN - SCOPUS:2442636390
SN - 0002-8282
VL - 94
SP - 46
EP - 56
JO - American Economic Review
JF - American Economic Review
IS - 1
ER -