Free-riding and the prisoner’s dilemma in takeover bids Abstract

Free-riding and the prisoner’s dilemma in takeover bids

Abstract:

Severals problems arise in the dynamics of a takeover bid, such as free riding and the prisoner’s dilemma. Some models propose the need to make a partial or a two-tier bid. Spanish regulations require mandatory takeover bids to be formulated for all of the company’s securities. Furthermore, in newly created companies, various bylaw clauses are established to protect minority shareholders in merger and acquisition processes.

Keywords: Takeovers, mergers and acquisitions, takeover bids, agency cost, opportunistic behavior, prisoner’s dilemma, estatutory law.