Fig. 4 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. 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. The downward drift of these lines shows that the stock returns to bidder firms were abnormally high during the estimation period, on average, so the intercepts are too high.

© Copyright 1996, G. William Schwert
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