THE OVERPAYMENT IN MULTIPLE BIDDING

기업합병: 다수경쟁에서의 과잉지분에 대한 연구

This paper provides an empirical analysis of the winner's curse in the context of corporate takeovers. The study analyzes conditions which make overpayment likely. For a sample of corporate takeovers completed between 1982 and 1993, the analysis shows that the volatility of targets relative to that of acquirers (not the uncertainty of the target or acquirer alone) has a definitive impact on the magnitude of the winner's curse. Also, the incidence is more pronounced in multiple-bidder than in single-bidder contests. Specifically, white knights are more likely to overpay than other acquirers in multiple bidding situations. Furthermore, the study finds that the process of competitive bidding is a zero sum game since the greater returns to the shareholders of target firms in multiple-bid contests come at the expense of the acquiring companies, Overall, the evidence suggests that the bidders need to become more conservative, particularly as the relative uncertainty of the target's 'true' value and the number of bidders increase.