Share class structure and the efficiency of corporate takeover : an experiment

This research paper tests the theoretical conclusions of Grossman and Hart (1988) through a laboratory experimental approach. Six treatment variations were designed to study the efficiency of management under three dimensions: share structures (one-share-one-vote and dual-class share structure), the...

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Main Authors: Tan, Alicia Yan Xiu, Chan, Sharmain, Laksmi Cahyady
Other Authors: Bao Te
Format: Final Year Project
Language:English
Published: 2019
Subjects:
Online Access:http://hdl.handle.net/10356/76668
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Institution: Nanyang Technological University
Language: English
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spelling sg-ntu-dr.10356-766682019-12-10T13:22:08Z Share class structure and the efficiency of corporate takeover : an experiment Tan, Alicia Yan Xiu Chan, Sharmain Laksmi Cahyady Bao Te Yohanes Eko Riyanto School of Social Sciences DRNTU::Social sciences::Economic theory::Microeconomics This research paper tests the theoretical conclusions of Grossman and Hart (1988) through a laboratory experimental approach. Six treatment variations were designed to study the efficiency of management under three dimensions: share structures (one-share-one-vote and dual-class share structure), the presence of an open market and the use of proration. The experiment was conducted through a computerised asset market using a continuous double auction and unrestricted and restricted tender offer market. Through the trading game, the Incumbent and Raider battled for the control of the firm. Our experiment results were not in line with our hypothesis. From our experiment, we obtain these results: (i) Number of successful tender offers were independent on share structure, (ii) In the presence of a market, there were fewer successful tender offers and (iii) Proration results in a significantly lower percentage of successful tender offers by the efficient Raider in a dual class share structure compared to a one-share-one-vote share structure. Bachelor of Arts in Economics 2019-04-02T08:29:17Z 2019-04-02T08:29:17Z 2019 Final Year Project (FYP) http://hdl.handle.net/10356/76668 en 51 p. application/pdf
institution Nanyang Technological University
building NTU Library
country Singapore
collection DR-NTU
language English
topic DRNTU::Social sciences::Economic theory::Microeconomics
spellingShingle DRNTU::Social sciences::Economic theory::Microeconomics
Tan, Alicia Yan Xiu
Chan, Sharmain
Laksmi Cahyady
Share class structure and the efficiency of corporate takeover : an experiment
description This research paper tests the theoretical conclusions of Grossman and Hart (1988) through a laboratory experimental approach. Six treatment variations were designed to study the efficiency of management under three dimensions: share structures (one-share-one-vote and dual-class share structure), the presence of an open market and the use of proration. The experiment was conducted through a computerised asset market using a continuous double auction and unrestricted and restricted tender offer market. Through the trading game, the Incumbent and Raider battled for the control of the firm. Our experiment results were not in line with our hypothesis. From our experiment, we obtain these results: (i) Number of successful tender offers were independent on share structure, (ii) In the presence of a market, there were fewer successful tender offers and (iii) Proration results in a significantly lower percentage of successful tender offers by the efficient Raider in a dual class share structure compared to a one-share-one-vote share structure.
author2 Bao Te
author_facet Bao Te
Tan, Alicia Yan Xiu
Chan, Sharmain
Laksmi Cahyady
format Final Year Project
author Tan, Alicia Yan Xiu
Chan, Sharmain
Laksmi Cahyady
author_sort Tan, Alicia Yan Xiu
title Share class structure and the efficiency of corporate takeover : an experiment
title_short Share class structure and the efficiency of corporate takeover : an experiment
title_full Share class structure and the efficiency of corporate takeover : an experiment
title_fullStr Share class structure and the efficiency of corporate takeover : an experiment
title_full_unstemmed Share class structure and the efficiency of corporate takeover : an experiment
title_sort share class structure and the efficiency of corporate takeover : an experiment
publishDate 2019
url http://hdl.handle.net/10356/76668
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