Price-setting behavior in the presence of social interactions

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We argue in this paper that a more active market for corporate control may weaken the takeover threat. We show that an increase in the number of potential raiders tends to decrease the probability of a takeover. This in turn weakens managerial incentives. The lower managerial effort level that results in equilibrium negatively affects the ex ante value of the firm.
Originele taal-2English
Aantal pagina's24
StatusPublished - 2003

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