Journal of Corporate Finance Vol. 3 No. 1 1996
The impact of the nature and sequence of multiple bids in corporate control contests
Abstract
This paper examines multiple-bidder corporate control contests involving white knights, who are late-entry collaborative bidders. We employ auction theory to structure the analysis and examine the valuation consequences for bidding firms. An immediate white knight response to a hostile bid is met with a strong, negative market reaction. When the white knight and hostile bidder get into a ‘bidding war’ with follow-up bids by each, the white knight (but not the hostile bidder) loses each time it bids. However, if the white knight bid follows two consecutive, hostile bids and the contest ends, there are minimal losses to the white knight, which are statistically indistinguishable from the mildly positive reaction to the preceding hostile bids.
- DOI
- 10.1016/s0929-1199(96)00007-7
- Volume
- 3
- Issue
- 1
- Pages
- 23-43
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref