The value of a merger and its optimal timing

In this article, we study a firm's merger strategy. When two firms merge, there are two types of transaction costs: fixed and proportional. To study the firm's merger strategy, we formulate the problem faced by the newly merged firm's management as an optimal stopping problem. Then, w...

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Veröffentlicht in:	Applied financial economics
1. Verfasser:	Okawa, Masaya (VerfasserIn)
Weitere Verfasser:	Tsujimura, Motoh (VerfasserIn)
Format:	UnknownFormat
Sprache:	eng
Veröffentlicht:	2009
Schlagworte:	Fusion > Strategisches Management > Suchtheorie > Aufsatz in Zeitschrift
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Beschreibung
Zusammenfassung:	In this article, we study a firm's merger strategy. When two firms merge, there are two types of transaction costs: fixed and proportional. To study the firm's merger strategy, we formulate the problem faced by the newly merged firm's management as an optimal stopping problem. Then, we derive the optimal merger strategy; that is, we find the optimal value of the merger option. We also show that the optimal strategy is unique. Furthermore, we illustrate numerical examples and undertake a comparative static analysis of the merger option.
Beschreibung:	graph. Darst.
ISSN:	0960-3107