Why do bidders do badly out of mergers? Some UK evidence

Article Abstract:

An analysis was conducted to determine the reason behind the poor performance of bidders during a company merger bidding process which results in overpayment. Some hyphotheses such as the 'winner's curse,' that states that the generosity of the bidding term may increase the possibilities of a successful bid, seemed to explain the rationale of bidder's overpayment. However, the hypothesis did not adequately explain the issue at hand. Moreover, the overpayment in bidding can be attributed to the bidder's eagerness to merge as explained by the bargaining theory approach.

Acquisitions & Mergers Analysis, Contract Administration, United Kingdom, Methods, Acquisitions and mergers, Letting of contracts, Competitive bidding, Financial analysis, Contract management, Bridge (Game), Contract bridge

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Game theory and the auditor's penalty regime

Article Abstract:

A cooperative game theory of the audit is used to examine how the strategic decision-making of the auditee and the auditor are affected when they are penalized for releasing a materially inaccurate set of statements that do not use qualified audit opinion. Investigation shows that these penalities must be set within particular zones. Selection of the zone should be based on the policy objectives of the penalty regime.

Analysis, Discipline, Auditing, Auditors, Game theory

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