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Institute
Exploring takeover dynamics, this dissertation uncovers CEO influence in deal negotiations, revealing a quad-ratic relationship between target CEO age and offer success. It examines Fairness Opinions' role in corporate control, emphasizing their impact on management recommendations and takeover success, particularly with independent assessors. The study outlines how signaling in corporate transactions can be both beneficial and potentially manipulative, depending on the alignment of incentives and the availability of information.
Signals during takeovers
(2023)
The success of a takeover offer hinges on the strategic deployment of signals, emanating from diverse sources including target and bidder management, as well as other stakeholders. The legal and factual frameworks governing the generation of informative signals play a pivotal role in determining which party holds the reins of the offer's success. Precise and widely disseminated signals empower shareholders to coordinate their actions effectively. In this study, I present a takeover offer game characterized by multiple equilibria with conditions of complete information. The adaption of the information structure following the approach of Carlsson & van Damme (1993) engenders a unique threshold equilibrium defined by a specific
threshold of a noisy signal concerning the target value. Notably, while opportunistically biased signals may impede efficiency, reliable signals can pave the way for efficiency-enhancing offers, thereby surmounting the free-rider dilemma outlined in Grossman & Hart (1980b). The probability of a signal falling short of this critical value provides a measure of the likelihood of a successful takeover. In the event of a successful acquisition, the financial gains are apportioned between the bidder and target shareholders.
It appears that the public perceives Fairness Opinions (FOs) merely as a secondary measure to manager liability insurance, which primarily serve to offer legal protection for the management rather than to provide economic transaction advice. To some degree this perception contrasts with the intended purpose of FOs, which is the assessment of financial adequacy of the offer to support the decision-making process of the client and the reduction of information asymmetries among stakeholders. This paper investigates the effect of FOs mandated by the target on the management recommendation in accordance with §27 WpÜG and the subsequent indirect effects on the success of corporate transactions in Germany. Based on a dataset of 323 transaction offers for publicly listed companies in Germany that were submitted in the years 2007 to 2022 we find strong evidence for the economic importance of FOs in the German market for corporate control. FOs increase the likelihood of unambiguous management recommendations. Utilizing path models, we find that positive (negative) FOs significantly increase (reduce) the success of corporate transactions. Our analyses suggest that the role of FOs for the efficiency of the market for corporate control is underestimated and should receive greater attention from both, regulators and market participants.
Betafaktoren
(2022)
Betafaktoren
(2022)