Takeovers and the dynamics of information flows
Chemla, Gilles (2004), Takeovers and the dynamics of information flows, International journal of industrial organization, 22, 4, p. 575-590. http://dx.doi.org/10.1016/j.ijindorg.2003.11.001
TypeArticle accepté pour publication ou publié
Journal nameInternational journal of industrial organization
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Abstract (EN)This Paper analyses the effect of a possible takeover on information flows and on the terms of trade in business relationships. We consider a long-term relationship between a firm and a privately-informed stakeholder, a buyer for example. In our model, takeovers both increase the surplus from trade and enable the firm to extract a potentially higher share of the surplus from the buyer. The possibility of a takeover that leaves the buyer with a higher (lower) rent than the incumbent manager increases (decreases) the buyer's willingness to reveal their valuation. We suggest a number of testable predictions on the performance of takeover targets and trade credit.
Subjects / Keywordstakeovers; information; price; value; disclosure; buyer
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