Abstract
AbstractThis study investigates the association between method of payment, long‐term performance plans, managerial stockholdings and abnormal returns to bidding firms at takeover announcements, using a cross‐sectional regression methodology. Previous studies have examined each of these factors separately. The results indicate that firms with long‐term performance plans and high managerial stockholdings in cash offers experience significantly higher abnormal returns at the announcement of mergers prior to 1980. The study provides additional evidence in explaining the previous conflicting results (Jensen and Ruback, 1985), examining the stock market reaction of bidding firms at merger announcements.
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