Title: Timings, terms and agency problems in mergers and acquisitions

Authors: Yuanbin Wang; Peijun Guo

Addresses: Faculty of Business Administration, Yokohama National University, 79-4 Tokiwadai, Hodogaya-ku, Yokohama 240-8501, Japan ' Faculty of Business Administration, Yokohama National University, 79-4 Tokiwadai, Hodogaya-ku, Yokohama 240-8501, Japan

Abstract: In this research, we analyse the timings, terms and agency problems in mergers and acquisitions where each firm optimally exercises its own exchange option and the timing and terms are determined endogenously. The theoretical analysis shows that the competition amongst the bidders will speed up merger and decrease the winning bidder's share in the post-merger firm; the agency problem will speed up or delay takeover. The managerial insights have been gained by the theoretical analysis.

Keywords: real options; mergers and acquisitions; M&A; game theory; agency problems; timing; terms.

DOI: 10.1504/IJIDS.2015.074130

International Journal of Information and Decision Sciences, 2015 Vol.7 No.4, pp.287 - 311

Available online: 12 Jan 2016 *

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