TY - JOUR
T1 - Holistic bidding strategies
T2 - Addressing target shareholders’ behavioral resistance in M&As
AU - Lauterbach, Beni
AU - Loriot, Blake
AU - Mugerman, Yevgeny
AU - Shemesh, Joshua
N1 - Publisher Copyright:
© 2025 The Author(s)
PY - 2025/3
Y1 - 2025/3
N2 - The study examines how behavioral considerations of target shareholders affect deal completion likelihood. Lauterbach, Mugerman and Shemesh (2024) show that bidders adjust their offer prices to accommodate target shareholders’ loss aversion, and we find that these premium adjustments appear to mitigate potential bid resistance. Our tests, conducted in an extensive sample of all U.S. public firm merger offers in 1990–2019, suggest a holistic pricing strategy among bidders: the offer price is based not only on intrinsic values and financial analysis; it also usually incorporates the price adjustment necessary to neutralize target shareholders’ behavioral resistance, thereby facilitating deal acceptance.
AB - The study examines how behavioral considerations of target shareholders affect deal completion likelihood. Lauterbach, Mugerman and Shemesh (2024) show that bidders adjust their offer prices to accommodate target shareholders’ loss aversion, and we find that these premium adjustments appear to mitigate potential bid resistance. Our tests, conducted in an extensive sample of all U.S. public firm merger offers in 1990–2019, suggest a holistic pricing strategy among bidders: the offer price is based not only on intrinsic values and financial analysis; it also usually incorporates the price adjustment necessary to neutralize target shareholders’ behavioral resistance, thereby facilitating deal acceptance.
KW - Deal completion
KW - Mergers and acquisitions
KW - Prospect theory
KW - Reference prices
UR - http://www.scopus.com/inward/record.url?scp=85215379263&partnerID=8YFLogxK
U2 - 10.1016/j.frl.2025.106822
DO - 10.1016/j.frl.2025.106822
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AN - SCOPUS:85215379263
SN - 1544-6123
VL - 74
JO - Finance Research Letters
JF - Finance Research Letters
M1 - 106822
ER -