Published November 2016
| Version Accepted Version
Working Paper
Open
Empirical Evidence of Overbidding in M&A Contests
Abstract
Surprisingly few papers have attempted to develop a direct empirical test for overbidding in M&A contests. We develop such a test grounded on a necessary condition for profit maximizing bidding behavior. The test is not subject to endogeneity concerns. Our results strongly support the existence of overbidding. We provide evidence that overbidding is related to conflicts of interest, but also some indirect evidence that it arises from failing to fully account for the winner's curse.
Additional Information
The authors thank François Derrien (HEC Paris), Espen Eckbo (Dartmouth College), Jarrad Harford (Washington University), Karin Thorburn (NHH) for their helpful comments as well as participants of Dauphine Finance Seminar, ECCCS Monday Finance Seminar, AFFI, Belgian Corporate Finance Day and EFMA conferences.Attached Files
Accepted Version - sswp1426.pdf
Files
sswp1426.pdf
Additional details
Identifiers
- Eprint ID
- 78846
- Resolver ID
- CaltechAUTHORS:20170707-101356502
Related works
- Describes
- http://resolver.caltech.edu/CaltechAUTHORS:20180822-105611868 (URL)
Dates
- Created
-
2017-07-13Created from EPrint's datestamp field
- Updated
-
2019-10-03Created from EPrint's last_modified field
Caltech Custom Metadata
- Caltech groups
- Social Science Working Papers
- Series Name
- Social Science Working Paper
- Series Volume or Issue Number
- 1426