Essays on Corporate Finance Using an Auction Approach

My dissertation consists of three essays on corporate \u85nance with a common auction component. The rst essay studies how takeover bidding reveals bidding \u85rmsprivate information. The second essay studies the interactions between hedging and bidding when \u85rms compete for the right to a risky project with a speci\u85c timing friction. The third essay studies the dual problem of a standard auction. Chapter one studies takeover bidding when bidders with private synergy values have incentives to signal high values to the market. Such an incentive could arise if the winner sells part of the joint company or issues equity to \u85nance the purchase after the takeover and the stock price includes his value. I show there are two ways a bidder signals a high value. One way is by o¤ering a premium in the opening bid, which results in separating equilibria. The opening bid premium strictly increases in the bidders value and is fully revealing. A maximum amount of information is released to the market, leading to e ¢ cient allocation and less volatility on the winners post-takeover stock price. Alternatively, pooling equilibria exist in which the opening bid is a constant and low, and the winner signals a high value by paying a high \u85nal price. Th