markup table 2

Table 2
Average pre-bid runups (Runup)and post-announcement markups (Markup)for different samples of successful and unsuccessful mergers or tender offers of exchange-listed target firms, 1975-91. Runup is the cumulative abnormal return to the target's stock from day -42 to day -1 relative to the first bid. Markup is the cumulative abnormal return to the target's stock from the day of the first bid through delisting or 126 trading days after the first bid, whichever comes first. The remaining columns show the proportions of each sample in which the target firm is taken over (Success), or there is pre-bid news implying that a bid might be forthcoming (News), or the target firm has a poison pill in place (Pill), or there are multiple bidder auctions (Auctions), or the deal is a tender offer (Tender Offer), or the deal is a management buyout (MBOs), or there is an all-cash payment to target shareholders (Cash), or there is an all-equity payment to target shareholders (Equity), or the S.E.C. later accused someone of engaging in insider trading prior to the takeover (Insiders). The rows show different samples of the data based on the characteristics of the deal. The main sample excludes deals that took longer than one year to consummate and target firms whose equity value is small (below $10 million) or whose pre-runup stock price is low (below $2 per share). All of the following samples are subsets of the main sample.
		Returns		Proportion of Sample
Sample	Sample Size, N	Runup	Markup	Success	News	Pills	Auctions	Tender Offers	MBOs	Cash	Equity	Insiders
All	1,814	0.133	0.101	0.772	0.443	0.136	0.207	0.350	0.112	0.600	0.172	0.079
Main	1,523	0.133	0.105	0.771	0.459	0.150	0.205	0.370	0.114	0.611	0.167	0.089
Successful	1,174	0.143*	0.158	1	0.456	0.140	0.192	0.451	0.122	0.636	0.173	0.115
Unsuccessful	349	0.100*	0.074	0	0.470	0.186	0.249	0.097	0.086	0.527	0.146	0
News	699	0.151*	0.079	0.765	1	0.239	0.265	0.418	0.124	0.624	0.119	0.119
No News	824	0.118*	0.127	0.775	0	0.075	0.154	0.330	0.104	0.601	0.208	0.063
Poison Pill	229	0.119	0.176*	0.716	0.729	1	0.362	0.5200	0.096	0.703	0.096	0.118
No Pill	1,294	0.135	0.092*	0.781	0.411	0	0.177	0.344	0.117	0.595	0.179	0.083
Auction	312	0.127	0.182*	0.721	0.593	0.266	1	0.532	0.103	0.67	0.074	0.099
No Auction	1,211	0.134	0.085*	0.784	0.424	0.121	0	0.329	0.116	0.596	0.191	0.086
Tender Offers	564	0.156*	0.201*	0.940	0.518	0.211	0.294	1	0.082	0.817	0.014	0.140
Mergers	959	0.119*	0.049*	0.672	0.424	0.115	0.152	0	0.132	0.49	0.257	0.058
MBOs	173	0.105*	0.089	0.827	0.503	0.127	0.185	0.266	1	0.763	0.012	0.110
Cash	931	0.141	0.142*	0.802	0.468	0.173	0.224	0.495	0.142	1	0	0.099
Equity	254	0.092*	0.077	0.799	0.327	0.087	0.091	0.031	0.008	0	1	0.047
Insiders	135	0.183*	0.212*	1	0.615	0.200	0.230	0.585	0.141	0.681	0.089	1
No Insiders	1,388	0.128*	0.095*	0.749	0.444	0.146	0.202	0.349	0.111	0.604	0.174	0
By Year of the First Bid:
1975	25	0.087	0.133	0.800	0.160	0	0.080	0.360	0.040	0.520	0.320	0
1976	43	0.157	0.156	0.907	0.209	0	0.140	0.372	0	0.558	0.256	0.023
1977	68	0.229*	0.128	0.853	0.206	0	0.162	0.294	0.044	0.574	0.250	0.015
1978	87	0.199*	0.021*	0.759	0.253	0	0.172	0.356	0.034	0.586	0.149	0.034
1979	92	0.222*	0.036*	0.717	0.304	0	0.207	0.337	0.033	0.543	0.141	0.022
1980	92	0.167	0.073	0.783	0.337	0	0.152	0.272	0.054	0.554	0.207	0.054
1981	79	0.117	0.182*	0.823	0.392	0	0.215	0.354	0.063	0.557	0.203	0.228
1982	81	0.145	0.175*	0.889	0.481	0	0.136	0.309	0.185	0.580	0.160	0.173
1983	84	0.119	0.084	0.893	0.524	0	0.167	0.238	0.190	0.583	0.226	0.131
1984	101	0.123	0.065	0.832	0.455	0.010	0.188	0.416	0.218	0.683	0.129	0.109
1985	123	0.119	0.082	0.821	0.528	0.073	0.211	0.382	0.179	0.602	0.138	0.228
1986	160	0.103*	0.106	0.725	0.475	0.194	0.219	0.450	0.119	0.675	0.119	0.063
1987	129	0.086*	0.108	0.767	0.535	0.264	0.256	0.442	0.163	0.605	0.155	0.062
1988	165	0.129	0.210	0.709	0.636	0.430	0.345	0.479	0.145	0.697	0.091	0.042
1989	114	0.086	0.040	0.605	0.667	0.395	0.237	0.377	0.088	0.667	0.140	0.053
1990	50	0.076	0.069	0.700	0.500	0.540	0.100	0.280	0.060	0.600	0.260	0.180
1991	30	0.138	0.237	0.667	0.500	0.367	0.033	0.167	0.033	0.433	0.400	0.033
Note: Average runups and markups that are different from the main sample mean at the 5% significance level are marked with an asterisk *.

Table 2

Note: Average runups and markups that are different from the main sample mean at the 5% significance level are marked with an asterisk *.

© Copyright 1996, G. William Schwert Return to Markup Pricing Page

© Copyright 1996, G. William Schwert
Return to Markup Pricing Page