Dynamic Asset Sales with Information Externalities • Job Talk

Speaker
Sivan Frenkel
Date
23/12/2013 - 12:30 - 11:00Add To Calendar 2013-12-23 11:00:00 2013-12-23 12:30:00 Dynamic Asset Sales with Information Externalities • Job Talk Abstract: We analyze a dynamic model of a public firm in which a transaction of an asset sale conveys information about the firm's value. The information release affects a manager whose compensation is sensitive to the stock price. The model is based on having, in every period, a potential buyer that, with some probability, engages in symmetric information bargaining with the manager. We examine how the information externality affects the timing of the transaction, the prices at which these assets are sold, and the pattern of stock prices before and after the sale. We then analyze how the division of bargaining power between the buyer and the seller affects the above. We then consider the case in which the firm sells only some of its assets, and therefore a transaction affects the market perception of the inventory of the remaining assets. אוניברסיטת בר-אילן - Department of Economics Economics.Dept@mail.biu.ac.il Asia/Jerusalem public
Affiliation
Hebrew University
Abstract

Abstract: We analyze a dynamic model of a public firm in which a transaction of an asset sale conveys information about the firm's value. The information release affects a manager whose compensation is sensitive to the stock price. The model is based on having, in every period, a potential buyer that, with some probability, engages in symmetric information bargaining with the manager. We examine how the information externality affects the timing of the transaction, the prices at which these assets are sold, and the pattern of stock prices before and after the sale. We then analyze how the division of bargaining power between the buyer and the seller affects the above. We then consider the case in which the firm sells only some of its assets, and therefore a transaction affects the market perception of the inventory of the remaining assets.

Last Updated Date : 30/11/2013