Variables

Definition

Dependent variable:

Spread

$\frac{\text{Valueoftransactionatannouncementdate}/\text{Numberoftarget'sshareoutstanding}}{\text{Targetclosingpriceatannouncementdate}-1}$

Independent variables:

Attitude of the bid

Dummy variable that equals to “1” if the offer is a hostile offer, and “0” otherwise.

Relative size

$\frac{\text{Valueoftransactionatannouncementdate}}{\text{Marketcapitalisationofthebidderatannouncementdate}}$

Payment method

Percentage of cash offered by the bidder for the target.

Premium

Premium paid by the bidder based on the target’s stock price one day before the announcement.

Termination fees

$\frac{\text{Targetterminationfees}}{\text{Valueoftransactionatannouncementdate}}$

Control variables:

Target performance

Target leverage

$\text{ROA}=\frac{\text{Netincome}}{\text{Totalassets}}$

$\frac{\text{Totaldebt}}{\text{Totalequity}}$