Table 8

Cross-sectional regression model explaining pre-bid volume runups during days -42 to -1 relative to the announcement of the first bid for 1,506 exchange-listed target firms that received takeover bids from 1975-91 as a function of whether the target firm is taken over, whether there is news that might foreshadow the bid, whether the target firm has a poison pill, whether multiple bidders eventually compete to acquire this firm, whether the bid is a tender offer, whether the bid is a management buyout (MBO), whether cash is the sole compensation for target stockholders, whether equity is the sole compensation for target stockholders, and whether the S.E.C. eventually prosecuted for insider trading in this transaction. Rsq is the adjusted coefficient of determination and S(n) is the standard deviation of the regression residuals. The t-statistics use White's (1980) heteroskedasticity-consistent standard errors.

VariableCoefficientT-statistic
Constant1.1145.06
Successful0.0930.47
News0.1601.06
Pill0.4392.21
Auction0.3321.96
Tender offers0.4352.50
MBOs0.1800.70
Cash0.1350.79
Equity0.1310.59
Insider trading0.8383.47
Degrees of freedom1,496
Rsquared0.015
Standard error of regression, S(n)2.753

© Copyright 1996, G. William Schwert
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