Contenu du sommaire : Varia

Should target shareholders divulgate their willingness to sell (WTS)? In this article, we tackle this issue by investigating the net WTS wealth effect. We first model the trade-off between the probability of a sale and the price paid in case of a sale, and derive testable predictions. We then provide an empirical test using a proxy of the target's WTS based on deal initiation and the chosen selling procedure, which are hand-collected in Securities and Exchange Commission filings. The results reveal a negative relationship between the target's displayed WTS and its expected profits, mitigated by competition among acquirers.

This paper analyzes the influence of industry shocks, mispricing, and managerial overconfidence on merger and acquisition activities on the Euronext Paris stock market, between 1996 and 2010. Merger and acquisition waves are led by industry shocks, where the probability that the target's shareholders will be paid with stock increases with overpricing of the bidding firm's shares, and tends to decrease with overconfidence of its manager. It thus appears that behavioral predictions do not necessarily contradict the economic disturbance hypothesis. Quite to the contrary, the influence of managerial overconfidence on the method of payment seems to be sensitive to industry shocks.

We analyze a model where irrational and rational informed traders exchange a risky asset with irrational market makers. Irrational traders misperceive the mean of prior information (optimistic/pessimistic bias) and the variance of the noise in their private signal (overconfidence/ underconfidence bias). Irrational market makers misperceive both the mean and the variance of the prior information. We show that moderately underconfident traders can outperform rational ones and that irrational market makers can fare better than rational ones. Lastly, we find that extreme level of confidence implies high trading volume.