Hostname: page-component-78c5997874-mlc7c Total loading time: 0 Render date: 2024-11-15T04:57:01.976Z Has data issue: false hasContentIssue false
  • English
  • Français

Predicting Tender Offer Success: A Logistic Analysis

Published online by Cambridge University Press:  06 April 2009

Ralph A. Walkling
Get access Rights & Permissions [Opens in a new window]

Abstract

This research develops and tests a model for the prediction of tender offer outcomes. Variables that increase the supply of “obtainable shares” (such as increased bid premiums or the payment of solicitation fees) are shown to increase the probability of success. Increased ownership of target firm shares by the bidder also increases the probability of success. Variables that impede the tendering of shares (such as target management opposition or a competing bid) decrease the probability of success. Tests of the model utilizing both linear and logistic analysis support the theoretical constructs and help resolve the paradoxical findings of previous research.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 20 , Issue 4 , December 1985 , pp. 461 - 478
Copyright
Copyright © School of Business Administration, University of Washington 1985

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

[*1]Aranow, Edward Ross, and Einhorn, Herbert A.. Developments in Tender Offers for Corporate Control. New York: Columbia University Press (1977).Google Scholar
[2]Bradley, Michael. “Interfirm Tender Offers and the Market for Corporate Control.” Journal of Business, Vol. 53 (10 1980), pp. 345–376.CrossRefGoogle Scholar
[3]Bradley, Michael; Desai, A.; and Kim, E. Han. “The Rationale behind Interfirm Tender Offers: Information or Synergy?” Journal of Financial Economics, Vol. 11 (1983), pp. 183–206.CrossRefGoogle Scholar
[4]Brown, Stephen, and Warner, Jerold. “Measuring Security Price Performance.” Journal of Financial Economics, Vol. 8 (09 1980), pp. 205–258.CrossRefGoogle Scholar
[5]Chapman, Randall G., and Staelin, Richard. “Exploiting Rank Ordered Choice Set Data within the Stochastic Utility Model.” Journal of Marketing Research, Vol. 19 (08 1982), pp. 288–301.CrossRefGoogle Scholar
[6]Dodd, Peter, and Ruback, Richard. “Tender Offers and Stockholder Returns: An Empirical Analysis.” Journal of Financial Economics, Vol. 5 (12 1977), pp. 351–374.CrossRefGoogle Scholar
[7]Ebeid, Fred Joseph. “The Inter-Firm Corporate Cash Tender Offer: Operating, Market, and Bid Characteristics of Target Firms.” Ph.D. Dissertation, University of Illinois at Urbana-Champaign (1974).Google Scholar
[8]Elgers, Peter, and Clark, John. “Merger Types and Shareholder Returns: Additional Evidence.” Financial Management, Vol. 9 (Summer 1980), pp. 66–72.CrossRefGoogle Scholar
[9]Funk and Scott's Index of Corporations and Industries: Annual Editions. Cleveland: Predicasts, Inc. (1971–1976).Google Scholar
[10]Hoffmeister, J. Ronald, and Dyl, Edward A.. “Predicting Outcomes of Cash Tender Offers.” Financial Management, Vol. 10 (Winter 1981), pp. 50–58.CrossRefGoogle Scholar
[11]ISL Daily Stock Price Index. New York: Standard and Poor's Corporation (1971–1978).Google Scholar
[12]Keown, Arthur J., and Pinkerton, John M.. “Merger Announcements and Insider Trading Activity: An Empirical Investigation.” Journal of Finance, Vol. 36 (09 1981), pp. 855–869.CrossRefGoogle Scholar
[13]Kim, E. Han, and McConnell, John J.. “Corporate Merger and the Co-Insurance of Corporate Debt.” Journal of Finance, Vol. 32 (05 1977), pp. 349–365.Google Scholar
[14]Kuehn, Douglas. Takeovers and the Theory of the Firm. London: The MacMillan Press (1975).CrossRefGoogle Scholar
[15]Langetieg, Terence Craig. “An Application of a Three-Factor Model to Measure Stockholder Gains from Merger.” Journal of Financial Economics, Vol. 6 (12 1978), pp. 365–384.CrossRefGoogle Scholar
[16]Mandelker, Gershon. “Risk and Return: The Case of Merging Firms.” Journal of Financial Economics, Vol. 1 (03 1974), pp. 303–335.CrossRefGoogle Scholar
[17]Morrison, Donald G. “On the Interpretation of Discriminant Analysis.” Journal of Marketing Research, Vol. 6 (05 1969), pp. 156–163.CrossRefGoogle Scholar
[18]Nerlove, Marc, and Press, S. James. Univariate and Multivariate Log-Linear and Logistic Models. Santa Monica, California: Rand (1973).Google Scholar
[19]Pelligrino, Joseph Charles. “Causes of Inter-Firm Tender Offers: An Empirical Study, 1962–1968.” Ph.D. Dissertation, Northwestern University (1972).Google Scholar
[20]Press, S. James, and Wilson, Sandra. “Choosing between Logistic Regression and Discriminant Analysis.” Journal of the American Statistical Association, Vol. 73 (12 1978), pp. 699–705.CrossRefGoogle Scholar
[21]Securities and Exchange Commission, Schedule 13D and 14D.Google Scholar
[22]Smiley, Robert. “Tender Offers, Transaction Costs and the Theory of the Firm.” Review of Economics and Statistics, Vol. 58 (02 1976), pp. 22–32.CrossRefGoogle Scholar
[23]Smith, Keith V. “Comment: A Financial Analysis of Acquisition and Merger Premiums.” Journal of Financial and Quantitative Analysis, Vol. 8 (03 1973), pp. 159–162.CrossRefGoogle Scholar
[24]Stevens, Donald L. “Financial Characteristics of Merged Firms: A Multivariate Analysis.” Journal of Financial and Quantitative Analysis, Vol. 8 (03 1973), pp. 149–158.CrossRefGoogle Scholar
[25]Stiglitz, Joseph E. “Some Aspects of the Pure Theory of Corporate Finance: Bankruptcies and Takeovers.” Bell Journal of Economics, Vol. 3 (Autumn 1972), pp. 458–482.Google Scholar
[26]Walkling, Ralph A. “Determinants of Bid Premiums in Inter-Firm Cash Tender Offers: A Simultaneous Equations Approach.” Manuscript, Georgia Institute of Technology (10 1981).Google Scholar
[27]Walkling, Ralph A., AND Michael, S. Long. “Agency Theory, Managerial Welfare and Takeover Bid Resistance.” The Rand Journal of Economics, Vol. 1 (1984), pp. 54–68.CrossRefGoogle Scholar
[28]“SEC May Tighten or Drop Rule Saying Holders Must Own Shares They Tender.” The Wall Street Journal (08 24, 1981), p. 8.Google Scholar
[29]The Wall Street Journal Index. New York: Dow Jones and Company (1971–1978).Google Scholar