Cable, John, Henley, Andrew and Holland, Kevin
Pot of gold or winner's curse? An event study of the auctions of 3G mobile telephone licences in the UK
Fiscal Studies, 23, (4), . (doi:10.1111/j.1475-5890.2002.tb00068.x).
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Commentators have suggested that the winning companies in the UK 3G mobile telephone auction overpaid for their licences. However, event-study method using the market model under ordinary least squares (OLS), robust and structural time-series estimation yields no systematic evidence of the 'winner's curse'. Positive as well as negative one-day wealth effects are observed amongst both winners and losers, and there is no lasting adverse market reaction to the winners, taken as a group. We conclude there is no case for easing the regulatory stance in the industry on grounds that the winners paid too much.
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