Abstract
Round number initial offers are pervasive in many bargaining situations. We examine the prevalence and outcome of such offers in the market for merger and acquisition targets. We find that the practice of making initial offers at round transaction values is associated with shorter contest duration and lower probability of encountering challenging bids. Our results suggest that round numbers are chosen strategically as a signal by impatient bidders who are willing to take a slight drive-up of price to secure a timely purchase and prevent competing bidders from entering the game.
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