Fig. 3 Cumulative average abnormal returns to bidder firms' stocks from trading day -126 to +253 relative to the first bid. Bids for all NYSE and Amex-listed target firms from 1975-91. Market model parameters used to define abnormal returns are estimated using the CRSP value-weighted portfolio for days -379 to -127. The intercepts are set to zero to estimate abnormal returns, since the bidder firms seem to have abnormally high stock returns during the estimation period (see fig. 4 below). There are 946 NYSE or Amex-listed bidder firms which made the first bid (shown as solid lines) and 924 exchange-listed firms made the winning bid (shown as dotted lines). The first and winning bidders are often the same.

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© Copyright 1996, G. William Schwert

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