Data Description

The initial acquisition sample is retrieved from the Securities Data Company
(SDC) and Mergers & Acquisitions (M&A) database during 19942002. To
narrow down the sample in order to achieve accurate results, further
restrictions are imposed. Firstly, data is generated from Wharton Research
Data Services (WRDS) of University of Pennsylvania using the Centre of
Research in Security Prices (CRSP) and COMPUSTAT. This information is used
to generate the control variables which are further used in the regression
analysis. This process further reduces the sample for the cross sectional
analysis performed in hypotheses 2 and 3.
Furthermore, in order to calculate the cumulative abnormal returns and for a
detail analyses of the impact of dual class share structure upon stock
returns, I further require the stock returns of the dual class and the single
class target firms. In order to justify the hypothesis that the dual class firms
tend to produce higher cumulative abnormal returns than their equivalent
single class, a cross section of all acquisitions made by all the dual class
targets and the equivalent single class targets is used. Panel A of Table 1
reports the summary statistics of the cross-sectional sample. The sample
contains 372 acquisitions announced by 182 bidding firms during the years
1994 to 2002, whose data is available for the regression analysis in Table 3
and 4. During the period of 1994 and 2002, the cumulative abnormal returns
are calculated between a two day window that is the returns two days before
the announcement date and two days after the announcement date (-2,+2)
while the announcement date being day zero. This is done using the market
model estimated with the Ordinary Least Square (OLS) regression model.
Furthermore, for the estimation of the alpha () and beta () of the market
model, an estimation window of 250 days is used which ends 15 days prior to
the announcement date. The analyses requires at least 40 daily stock returns
in the estimation window. Finally, following the work in previous studies,

(Harford, 1999; Schlingemann, 2004), the sample only includes the major
transactions as defined by the SDC, namely Mergers and Acquisitions of
majority interests. Also, both the acquirer and the target are required to be
listed on the New York Stock Exchange (NYSE), American Stock Exchange
(AMEX), or National Association of Securities Dealers Automated Quotations
(NASDAQ), following the work of Harford (1999).
For the analyses of bidder operating performance, the sample sizes differ
from that of the announcement effects analysis due to the differing data
requirements specified below. To analyse the bidder operating performance,
we require the deals to be successfully completed or not. More importantly,
to analyse the uses of funds after the acquisitions, I use both the completed
and the withdrawn deals and require this data to be available to calculate the
target performance.
For the predicting bidder analysis, we use a panel of COMPUSTAT companyyears that have the available data during the period 19802008. We use a
binary variable, namely acquisition, to flag a company-year in which the
company announces one or more acquisitions. This variable is the dependent
variable in our predicting bidder regression analysis in Table 5. Panel B of
Table 2 reports the summary statistics of this panel data. All variables are
winsorized at the 1st and 99th percentiles. Altogether, we have 13,023
company-years with the required data. There are 1447 bidder company-years
in which a company announces at least one acquisition. We further separate
the panel into years in which a company announces an acquisition or more (a
bidder company-year; acquisition= 1) and those years in which a company
does

not

announce

acquisition=0).

any

acquisition

(a

non-bidder

company

year;