Table 9

Table 9
Regressions of the total premium paid to target stockholders (Premium) on the pre-bid runup for the target firm (Runup) and for the bidder firm (Runup_B) for various samples of successful mergers and tender offers for exchange-listed target firms, 1975-91: Premium = a + b Runup + c Runup_B + u, where Premium = Runup + Markup. Runup (Runup_B) is the cumulative abnormal return to the target's (bidder'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 substitution hypothesis implies b < 1, while the markup pricing hypothesis implies b = 1. The average 42-day runup for the target (bidder) is in the sixth (fourth) column from the right and the average 127-day markup for the target (bidder) is in the fifth (third) column from the right. S(u) is the standard error of the regression and is the adjusted coefficient of determination. White's (1980) heteroskedasticity-consistent standard errors are used to compute the t-statistics.
	Proportion of Sample	Sample Size,N	Target Runup Coef, b	T-stat, t(b=1)	Bidder Runup Coef, c	T-stat, t(c=0)	Constant, a	T-stat, t(a=0)	Avg Target Runup	Avg Target Markup	Avg Bidder Runup_B	Avg Bidder Markup_B	S(u)	Rsquared
All deals		915	1.005	0.08	0.103	1.18	0.105	7.66	0.146	0.107	0.012	0.011	0.287	0.32
Main sample		790	0.973	0.45	0.085	0.91	0.118	8.12	0.147	0.116	0.015	0.010	0.274	0.32
Successful	84.30%	666	0.968	0.64	0.042	0.44	0.151	11.04	0.153	0.147	0.016	0.002	0.251	0.35
Unsuccessful	15.70%	124	0.856	0.57	0.180	0.82	0.036	0.81	0.116	0.051	0.010	0.053	0.330	0.22
News	42.70%	337	1.039	0.52	0.124	0.87	0.086	4.21	0.181	0.095	0.016	0.037	0.266	0.38
No news	57.30%	453	0.938	0.68	0.055	0.45	0.138	6.99	0.122	0.131	0.015	0.010	0.279	0.27
Pill	11.80%	93	0.930	0.25	0.156	0.69	0.243	4.54	0.126	0.239	0.030	0.001	0.310	0.26
No pill	88.20%	697	0.992	0.16	0.050	0.51	0.100	7.26	0.150	0.099	0.013	0.011	0.265	0.34
Auction	20.80%	164	0.657	1.66	0.526	1.99	0.248	6.02	0.146	0.199	0.002	0.035	0.338	0.15
No auction	79.20%	626	1.032	0.65	0.005	0.05	0.089	6.48	0.147	0.094	0.019	0.004	0.248	0.40
Tender offer	40.30%	318	0.847	2.17	0.149	1.44	0.209	10.60	0.175	0.185	0.017	0.025	0.240	0.30
Mergers	59.70%	472	0.986	0.16	0.053	0.42	0.070	3.68	0.128	0.069	0.014	0.034	0.285	0.32
MBOs	2.90%	23	0.832	0.91	0.433	1.41	0.077	1.50	0.144	0.068	0.036	0.090	0.184	0.40
Cash	49.10%	388	0.897	1.53	0.096	0.83	0.170	9.61	0.155	0.155	0.012	0.007	0.262	0.30
Equity	26.30%	208	0.977	0.14	0.006	0.03	0.101	3.24	0.110	0.098	0.019	0.045	0.293	0.30
Insider	10.60%	84	0.613	2.56	0.126	0.52	0.269	6.31	0.200	0.194	0.024	0.000	0.217	0.12
No insider	89.40%	706	0.980	0.31	0.076	0.78	0.108	7.11	0.141	0.106	0.014	0.011	0.278	0.33

Table 9

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

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