Resource title

Corporate restructuring through transitory joint ventures

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This paper proposes that joint ventures can be used as transitory organizations that aid in the process of corporate restructuring.If the quality of a business is not observable by an outsider, then a firm that is trying to sell the business faces the problem of adverse selection. A game-theoretic model is used to show that this problem can be alleviated if the restructurer converts the business into a transitory joint venture with the potential buyer. Transitory joint venturing is the optimal way to achieve corporate restructuring if joint venture administrative cost is moderately high and if a large proportion of businesses that are up for sale are of low quality. Case studies of corporate restructuring through transitory joint ventures are used to illustrate and extend these arguments

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en

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application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/Inseadwp1995/95-81.pdf

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Copyright INSEAD. All rights reserved