Contents of Volume 1 xxi
12.1. Bank debt versus bonds: Bharath (2004) 78
12.2. Matching and long-run performance: Cheng (2003), Li and Zhao (2006) 79- Bayesian methods 80
13.1. Matching: Sørensen (2005) 80
13.2. Switching regressions: Li and McNally (2004), Scruggs (2006) 81 - Conclusions 83
References 83
Chapter 3
Auctions in Corporate Finance
SUDIPTO DASGUPTA and ROBERT G. HANSEN 87
Abstract 88
Keywords 88
- Introduction 89
- The most basic theory: Independent private values 90
2.1. Initial assumptions 90
2.2. First-price sealed-bid auctions 91
2.3. Open and second-price sealed-bid auctions 94
2.4. Revenue equivalence 96
2.5. Reserve prices 97
2.6. Optimal selling mechanisms 99
2.7. Interpreting the optimal auction: The marginal revenue view 102 - Common-value auctions 103
3.1. Common value assumptions 103
3.2. Optimal bidding with a common value 104
3.3. Milgrom and Weber’s (1982a, 1982b) generalized model 104
3.4. Limitations of the common-value and general symmetric auctions 108 - Applications of auction theory to corporate finance 109
4.1. Introduction 109
4.2. Applications to the market for corporate control 109
4.3. Means-of-payment 118
4.4. Toeholds 119
4.5. Bidder heterogeneity and discrimination in takeover auctions 123
4.6. Merger waves 126
4.7. Auctions in bankruptcy 129
4.8. Share repurchases 131
4.9. Auction aspects of initial public offerings (IPOs) 132
4.10. The spectrum auctions and the role of debt in auctions 136
4.11. Advanced econometrics of auction data 137 - Conclusion 138
References 140