• ISSN: 2301-3567
    • Frequency: Quarterly (2013-2014); Monthly (Since 2015)
    • DOI: 10.18178/JOEBM
    • Editor-in-Chief: Prof. Eunjin Hwang
    • Executive Editor: Ms Jessica C. Xiao
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JOEBM 2013 Vol.1(1): 46-48 ISSN: 2301-3567
DOI: 10.7763/JOEBM.2013.V1.11

Theory of Exit Choice: IPOs versus Acquisitions with Differential Bargaining

Rohan Chinchwadkar and Rama Seth
Abstract— This paper introduces differential bargaining into the Bayar and Chemmanur (2011) model of exit choice between IPOs and acquisitions and shows that a mixed strategy equilibrium can exist for both high (H) type and low (L) type firms. Using the concept of signaling games and perfect Bayesian equilibrium, we prove for the first time in a theoretical framework that PE investors are inclined to take more type H firms public than entrepreneurs.

Index Terms— Private equity exits, initial public offering, acquisitions, signaling games

R. Chinchwadkar and R. Seth are with the Indian Institute of Management Calcutta, Kolkata 700104 India (e-mail: rohan.chinchwadkar@gmail.com, rama_seth@iimcal.ac.in).

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Cite: Rohan Chinchwadkar and Rama Seth, " Theory of Exit Choice: IPOs versus Acquisitions with Differential Bargaining," Journal of Economics, Business and Management vol. 1, no. 1, pp. 46-48, 2013.

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