Segmenting by target management response into white knights, hostile bidding firms and friendly non-white knights reveals differences in BCPE across these groups.
In order to ascertain the marginal effect of white knight status on acquisition period abnormal returns to bidding firm shareholders, holding constant the effects of other bid characteristics, the following regression is estimated: BCPE = ||Alpha~.
Further evidence of this is shown in Regression (3) of Panel B, in which BCPE of subsequent bids only is regressed on WK, HOST, CASH and MIX.
When white knights are deleted from the sample, the mean BCPE for first and subsequent bidders is -1.
Similar results were obtained using an alternative procedure in which the data were ranked on relative size, the middle third deleted, and BCPE was averaged among observations in the smallest third and the largest third, separately.
For these firms, dollar gains are computed by multiplying BCPE by the market value of the bidder's common stock at day -3.
j~ = Number of trading days in bidding firm j's cumulation of BCPE.
17 Ultimate bid success is not a significant determinant of BCPE, presumably because the window over which BCPE is computed is short and does not impound information about the bid outcome.