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Winning by Losing: Evidence on Overbidding in Mergers
2006
Social Science Research Network
Do shareholders of acquiring companies profit from acquisitions, or do acquiring CEOs overbid and destroy shareholder value? Answering this question is difficult since the hypothetical counterfactual is hard to determine. We exploit merger contests to address the identification issue. In cases where there are at least two bidders with a significant ex-ante chance at winning the contest, we use the post-merger performance of the loser to calculate the counterfactual performance of the winner
doi:10.2139/ssrn.891296
fatcat:7pxtv4ypgredfc5frrprsmucwi