Negotiating Corporate Combinations: A Theory and Evidence
Abstract
Managers often use negotiation as a conflict-resolution mechan-ism. We characterize this negotiation process as a problem of dividing ownership in a corporate combination. We specify a set of axioms which imply a unique outcome of this negotiation process. In par-ticular, ownership in the combinedfirm will be divided in proportion to the value of resources contributed by each constituent to the transaction. We tested this prediction of ownership division using a sample of 133 recent corporate combinations. The evidence is con-sistent with this prediction.
- DOI
- 10.1177/014920638300900205
- Sources
- openalex