%0 Journal Article
%@ 0022-1082
%A Gorbenko, Alexander
%A Malenko, Andrey
%D 2024
%F discovery:10154224
%I Wiley-Blackwell
%J The Journal of Finance
%N 2
%P 1353-1403
%T Auctions with Endogenous Initiation
%U https://discovery.ucl.ac.uk/id/eprint/10154224/
%V 79
%X We study initiation of takeover auctions by potential buyers and the seller. A bidder's indication of interest reveals that she is optimistic about the target. If bidders' values have a substantial common component, as in takeover battles between financial bidders, this effect disincentivizes bidders from indicating interest, and auctions are seller-initiated. Conversely, in private-value auctions, such as battles between strategic bidders, equilibria can feature both seller- and bidder-initiated auctions, with the likelihood of the latter decreasing in commonality of values and the probability of a forced sale by the seller. We also relate initiation to bids and auction outcomes.
%Z This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.