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Information disclosure, method of payment, and takeover premiums

Author: Langohr, Herwig ; Eckbo, B. EspenINSEAD Area: Finance In: Frontiers of finance:the Batterymarch Fellowship papers - Miller, Deborah H.;Myers, Stewart C. - 1990 - Book Language: EnglishDescription: p. 652-693.Type of document: INSEAD ChapterNote: Please ask the Library for this chapter.Abstract: Controlled experiments in corporate finance are rare. Financial economists must attempt to isolate the effects of variable X in real life, where there are always several other variables at work behind a screen of noise. When a clear fact emerges, there are usually several plausible competing explanations. Turning to a fresh institutional setting often helps sorting things out. This chapter provides a perfect example. The problem is to distinguish the effects on tender offers of (a) increased requirements for disclosure and (b) increases in the minimum tender offer period. The Williams Act changed (a) and (b) at the same time, and so it is dificult to separate their contributions to subsequent increases in offer premiums.In France, variable (a) alone was changed in 1970. Since offer premiums also increased in France after that change, the importance of disclosure requirements seems tobe confirmed. Therefore our confidence in the importance of disclosure requirements in the United States is reinforced
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Controlled experiments in corporate finance are rare. Financial economists must attempt to isolate the effects of variable X in real life, where there are always several other variables at work behind a screen of noise. When a clear fact emerges, there are usually several plausible competing explanations. Turning to a fresh institutional setting often helps sorting things out. This chapter provides a perfect example. The problem is to distinguish the effects on tender offers of (a) increased requirements for disclosure and (b) increases in the minimum tender offer period. The Williams Act changed (a) and (b) at the same time, and so it is dificult to separate their contributions to subsequent increases in offer premiums.In France, variable (a) alone was changed in 1970. Since offer premiums also increased in France after that change, the importance of disclosure requirements seems tobe confirmed. Therefore our confidence in the importance of disclosure requirements in the United States is reinforced

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