Handbook of Corporate Finance Empirical Corporate Finance Volume 1

94 S. Dasgupta and R.G. Hansen Multiplying this byNgives the seller’s expected revenue as E(Revenue to seller)= (11) N− 1 N+ 1 . ...

Ch. 3: Auctions in Corporate Finance 95 value is a dominant strategy.^8 Staying in the auction beyond the point of the bid equal ...

96 S. Dasgupta and R.G. Hansen to its most highly-valued use. Reserve prices, considered below, may hamper this effi- cient tran ...

Ch. 3: Auctions in Corporate Finance 97 Notice thatPiA( 0 )is the expected payment made by bidderiwith the lowest draw of the si ...

98 S. Dasgupta and R.G. Hansen ΠA(v∗,v∗)=G(v∗)v∗−PA(v∗)=0. Now from(14), integrating, we get forvv∗ PA(v)=PA(v∗)+ ∫v v∗ yg(y) d ...

Ch. 3: Auctions in Corporate Finance 99 It remains to characterize the reserve prices in different auction settings. Suppose the ...

100 S. Dasgupta and R.G. Hansen that all bidders’ valuations are drawn from identical distributions, i.e., one can accom- modate ...

Ch. 3: Auctions in Corporate Finance 101 expression: ∑N i= 1 pi( 0 )+ ∑N i= 1 ∫ V ( vi− 1 −Fi(vi) fi(vi) ) Qi(v)f (v)dv = (18) ∑ ...

102 S. Dasgupta and R.G. Hansen 2.7. Interpreting the optimal auction: The marginal revenue view Bulow and Roberts (1989)provide ...

Ch. 3: Auctions in Corporate Finance 103 Common-value auctions 3.1. Common value assumptions To this point we have mostly cons ...

104 S. Dasgupta and R.G. Hansen 3.2. Optimal bidding with a common value We begin with the illustrative example introduced above ...

Ch. 3: Auctions in Corporate Finance 105 bidders, but synergies will likely differ across bidders and therefore contribute an el ...

106 S. Dasgupta and R.G. Hansen strategy, then her expected payoff is ∫bS−^1 (b 1 ) 0 ( v(t, y)−v(y, y) ) g(y|t)dy. Differentiat ...

Ch. 3: Auctions in Corporate Finance 107 which should be zero atz=t. Thus, we get (25) ( v(t, t)−bF(t) )g(t|t) G(t|t) =bF ′ (t). ...

108 S. Dasgupta and R.G. Hansen seller releases an informative variable that is affiliated with the other variables, then the ex ...

Ch. 3: Auctions in Corporate Finance 109 equally likely. Then each bidder has an expected value of 150, and an open auction will ...

110 S. Dasgupta and R.G. Hansen 3688 acquisitions, the average two-day abnormal return around the announcement of an acquisition ...

Ch. 3: Auctions in Corporate Finance 111 whereARuis the average abnormal return conditional on the offer being unsuccess- ful. H ...

112 S. Dasgupta and R.G. Hansen auctions, for avoidance of the winner’s curse requires some careful analysis. Those in- clined t ...

Ch. 3: Auctions in Corporate Finance 113 about 2%.Betton, Eckbo and Thorburn (2005)argue that since toeholds are likely to deter ...