Corporate reorganizations and non-cash auctions

Article Abstract:

An extension of the theory of non-cash auctions that considers revenue and efficiency of using different securities is presented. Strengths and weaknesses of sample proposals to use non-cash auctions to sell a bankrupt firm in a corporate reorganization or to privatize a public sector entity are discussed in detail; research suggests using the auctions to increase cash-constrained bidder participation, but bidders tend to pool when bids do not include debt, resulting in possible repossession and suggesting that all-equity outcomes are unlikely. The model presented helps explain the high debt observed in reorganized firms and the inefficiency of determining bidders' incentive contracts through securities. A new cash auction is recommended when an incentive contract is up for bid.

Organizational history, Science & research, Analysis, Marketing, Statistics, Securities, Privatization, Privatization (Business), Auctions, Organizational behavior, Bankruptcy

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Strategic trading when agents forecast the forecasts of others

Article Abstract:

We analyze a multi-period model of trading with differentially informed traders, liquidity traders, and a market maker. Each informed trader's initial information is a noisy estimate of the long-term value of the asset, and the different signals received by informed traders can have a variety of correlation structures. With this setup, informed traders not only compete with each other for trading profits, they also learn about other traders' signals from the observed order flow. Our work suggests that the initial correlation among the informed traders' signals has a significant effect on the informed traders' profits and the informativeness of prices. (Reprinted by permission of the publisher.)

Research, Stocks, Business forecasting

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Market valuation and merger waves

Article Abstract:

The correlation between market valuations and stock merger activity is evaluated.

United States, Management dynamics, Evaluation, Acquisitions and mergers, Company business management, Stock transfer, Market value

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