Analysis On Institutional Transaction Cost Of Tender Offer-Based On Option Pricing Model

The merger and acquisition of listed companies is an important way to realize the function of resource integration and value discovery of capital market.The more active the merger and acquisition transactions in the capital market,the more fully the function of the capital market.As a basic transaction system,tender offer is intended to protect the interests of minority shareholders holding the shares of the acquiree,and may bring certain institutional transaction costs to the parties involved in the merger and acquisition of enterprises.The institutional transaction costs brought by tender offer are directly related to the realization of economic benefits of mergers and acquisitions,and affect the incentives and specific decisions of all parties in mergers and acquisitions.Through theoretical analysis,this paper refers to the uncertainty theory of financial intermediation and information asymmetry theory,and concludes that from the perspective of uncertainty,it is equivalent to providing an "insurance" or "put option" to the minority shareholders holding the shares of the acquiree,so that they can avoid the adverse impact of uncertainty during the M&A of listed companies;From the perspective of information asymmetry,the cost of this "insurance" or "put option" should be borne by the party with the largest potential profit in the tender offer,namely,the acquirer.On this basis,this paper selects five tender offer transactions in China’s securities market in 2022 for case analysis,estimates the value of "put option" obtained by minority shareholders under the tender offer system through the American put option pricing method,and analyzes the institutional transaction costs borne by the acquirer.Furthermore,it analyzes the impact of changes in specific elements in the tender offer system on institutional transaction costs.The final conclusion is that the current tender offer system is still relatively simple in terms of institutional design,and it does not take into account the objective market conditions faced by all parties in the merger and acquisition,which not only increases the institutional transaction costs borne by all parties in the transaction,especially the acquirer,but even leads to unreasonable results that certain parties gain while other parties suffer under certain circumstances.High institutional cost and unreasonable interest distribution under specific circumstances are the important reasons why the securities market subjects generally seek offer exemption to avoid the launch of offer in mergers and acquisitions,thus making the tender offer system unable to play a full role.On this basis,some opinions and suggestions on the design of tender offer system are put forward.The content of this paper is as follows: The first chapter is the introduction.Chapter two deals with the related concepts of tender offer and institutional transaction costs.The third chapter analyzes the institutional transaction cost of tender offer,differentiates the nature of tender offer from the theoretical point of view,compares the similarities and differences between tender offer system and American put option contract,and puts forward the idea that the institutional transaction cost of tender offer can be estimated by referring to the pricing method of American put option.The fourth chapter is the estimation of the cost of the check out option,using the GARCH(1,1)model to estimate the volatility of the acquiree’s stock price,and combined with other parameters using the implicit difference method to estimate the institutional transaction cost of the selected tender offer cases.The fifth chapter is the conclusion and suggestion,put forward the conclusion that the tender offer system design does not match the current market environment,and put forward the corresponding improvement suggestions..