Suchergebnisse

AbstractIn a three‐way takeover, a firm bids for a bidder while the bidder's own acquisition deal is ongoing. The bid creates a three‐party fight among the target, bidder, and bidder's bidder (b‐bidder) which is unobservable in typical takeover contests. Examining a sample of three‐way takeovers, we find that more than half of the deals are clustered in financial, utilities, and communication, where fierce competition for market power drives the three‐way bids. Targets and bidders gain from the three‐party bargaining at the expense of b‐bidders who appear to be more concerned about winning the bids irrespective of the costs.

AbstractAs opposed to the "low beta low risk" convention, we show that low beta stocks are illiquid and exposed to high liquidity risk. After adjusting for liquidity risk, low beta stocks no longer outperform high beta stocks. Although investors who "bet against beta" earn a significant beta premium under the Fama–French three‐ or five‐factor models, this strategy fails to generate any significant returns when liquidity risk is accounted for. Our work helps understand the beta premium from a new liquidity‐risk perspective, and draws useful implications for both fund and corporate managers.