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Viewing report
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Takeovers, Restructuring, and the Market for
Corporate Control. Edition No. 1
VDM Publishing House, Jan 2009, Pages: 244
Ownership structure: Does it matter in takeovers?
That has been the central focus of this book. This
study investigates the effects of the ownership
structure of target firms on the returns to
shareholders of bidding and target firms in corporate
takeovers.
Grossman and Hart introduced the free-rider problem
in takeovers and showed that atomistic target
shareholders will take all the post-takeover
value-improvements of the bidder when the bidder
cannot dilute minority shareholders of the target
firm. Bagnoli and Lipman, and Shleifer and Vishny
argued that if target shareholders are pivotal
respectively have toeholds, the bidder can overcome
the free-rider problem.
We describe the microeconomic structure of the
takeover market and analyze the supply and demand
factors. The supply side of the takeover market is
determined by target shareholdings. The demand side
is determined by the initial shareholdings of the
bidder and competition between bidders. In our
empirical study, we find empirical evidence for the
relationship between the degree of ownership
concentration in target firms and the returns to
shareholders of bidding and target firms.
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