IDEAS home Printed from https://ideas.repec.org/a/ucp/jnlbus/v67y1994i3p423-57.html
   My bibliography  Save this article

Why Negotiation with a Single Syndicate May Be Preferred to Making Syndicates Compete: The Problem of Trapped Bidders

Author

Listed:
  • Hansen, Robert S
  • Khanna, Naveen

Abstract

The authors investigate the choice between hiring syndicates through competitive bidding and negotiation. Making syndicates compete can result in inferior terms because of inefficiencies like less effective search, possibly less total search, and trapped bidders. Empirical results are consistent with the authors' hypotheses that purchasing syndicates search less under competition and that competition produces trapped bidders. The results also show that the primary market is rigidly divided under competition. When this occurs, total search under competitive bidding can be less than total search under negotiation. This may explain why competitive bidding is not favored in spite of its lower cost. Copyright 1994 by University of Chicago Press.

Suggested Citation

  • Hansen, Robert S & Khanna, Naveen, 1994. "Why Negotiation with a Single Syndicate May Be Preferred to Making Syndicates Compete: The Problem of Trapped Bidders," The Journal of Business, University of Chicago Press, vol. 67(3), pages 423-457, July.
    • Handle: RePEc:ucp:jnlbus:v:67:y:1994:i:3:p:423-57
    DOI: 10.1086/296640
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/296640
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    File URL: https://libkey.io/10.1086/296640?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hansen, Robert S., 2001. "Do investment banks compete in IPOs?: the advent of the "7% plus contract"," Journal of Financial Economics, Elsevier, vol. 59(3), pages 313-346, March.
    2. Logue, Dennis E. & Tinic, Seha M., 1999. "Optimal choice of contracting methods: negotiated versus competitive underwritings revisited," Journal of Financial Economics, Elsevier, vol. 51(3), pages 451-471, March.
    3. Kriz, Kenneth A., 2003. "Comparative costs of negotiated versus competitive bond sales: new evidence from state general obligation bonds," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(2), pages 191-211.
    4. Bortolotti, Bernardo & Megginson, William & Smart, Scott B., 2007. "The Rise of Accelerated Seasoned Equity Underwritings," Privatisation Regulation Corporate Governance Working Papers 12190, Fondazione Eni Enrico Mattei (FEEM).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jnlbus:v:67:y:1994:i:3:p:423-57. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.jstor.org/journal/jbusiness .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.