Corporate acquisition process: Is there an optimal cash-equity payment mix?
de La Bruslerie, Hubert (2012), Corporate acquisition process: Is there an optimal cash-equity payment mix?, International Review of Law and Economics, 32, 1, p. 83-94. http://dx.doi.org/10.1016/j.irle.2011.07.003
TypeArticle accepté pour publication ou publié
External document linkhttp://halshs.archives-ouvertes.fr/halshs-00636349
Journal nameInternational Review of Law and Economics
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Author(s)de La Bruslerie, Hubert
Abstract (EN)This paper examines the combination of cash and share payments made during corporate acquisitions. Particularly, it analyzes the conditions of an optimal mixed payment in a context of asymmetry of information. Using a model, we highlight that the setting of conditions of payment is an endogenous part of a takeover agreement between the acquirer and the target. Our contribution is to show how, in the acquisition process, the cash percentage setting is a key element for conveying private information on the gains of synergy and the gains resulting from the transaction. We internalize in our model asymmetries of information and possible exaggeration biases. Both will influence the joint setting of a mixed payment scheme.
Subjects / Keywordsmeans of payment; information asymmetry; synergy; financing decision; mergers and acquisitions
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