Asymmetric Information and the Medium of Exchange in Takeovers: Theory and Tests

摘要: In a model of takeovers under asymmetric information, we identify separating equilibrium in which the value bidder firm is revealed by mix cash and securities used aspaymentfor target. The predicts that monotonically increasing convex fraction total offer consists cash. We examine restrictions using data from Canada, where mixed offers are both relatively frequent free confounding tax-related options characterizing United States. find average announcement-month abnormal return large significant. However, maximum likelihood estimates parameters linear nonlinear cross-sectional regressions fail to support modelpredictions.