Privatization and Leverage

Christian At and Pierre-Henri Morand ()

Abstract: This paper studies privatization methods when potential buyers can lever up strategically to maximize their probability of winning. We endogenize the optimal fraction of shares to be auctioned off when privatizing a company. There is a close correlation between the optimal fraction of shares to be sold off and the auction winner's debt level and hence the risk of bankruptcy

Keywords: privatization; contract design; bankruptcy (search for similar items in EconPapers)
Date: 2009
Note: View the original document on HAL open archive server: https://hal.science/hal-01313413v1
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Published in Journal of Law, Economics, and Organization, 2009, 28 (1), pp.32-44

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Journal Article: Privatization and Leverage (2012)
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