Handbook of Empirical Corporate Finance SET

4 Takeover gains

In this section, we present estimates of abnormal stock returns to bidders and targets around takeover contests, as well as in the post-merger period. Given the large number of papers providing abnormal returns estimates in takeovers, we limit the review to more recent studies with large samples of 1,000 or more bidder firms, such as those listed in Table 6. Studies are included in the table only if announcement-induced abnormal returns to bidders are in fact reported. This excludes large-sample studies such as Schwert (1996) and Bates and Lemmon (2003), where the main focus is on targets or some other deal aspect and where bidder returns may be estimated and used for purposes of cross-sectional regressions—but average announcement ...