TY  - JOUR
AU  - Hietala,Pekka
AU  - Kaplan,Steven N.
AU  - Robinson,David T.
TI  - What is the Price of Hubris? Using Takeover Battles to Infer Overpayments and Synergies
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9264
PY  - 2002
Y2  - October 2002
UR  - http://www.nber.org/papers/w9264
L1  - http://www.nber.org/papers/w9264.pdf
N1  - Author contact info:
Steven N. Kaplan
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4513
Fax: 773/702-0458
E-Mail: steven.kaplan@chicagobooth.edu

David T. Robinson
Fuqua School of Business
Duke University
100 Fuqua Drive
Durham, NC 27708
Tel: 919/660-8023
Fax: 919/684-2818
E-Mail: davidr@duke.edu
AB  - We present a framework for determining the information that can be extracted from stock prices around takeover contests.  In only two types of cases is it theoretically possible to use stock price movements to infer bidder overpayment and relative synergies.  The takeover contest for Paramount in 1994 illustrates one of these generic cases.  We estimate that Viacom, the  winning' bidder, overpaid for Paramount by more than $2 billion.  This occurred despite the fact that Viacom's CEO owned roughly 3/4 of Viacom.  These results are consistent with managerial overconfidence and/or large private benefits, but not with the traditional agency-based incentive problem.
ER  -