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Contested Tender Offers: An Estimate of the Hazard Function

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  • Jaggia, Sanjiv
  • Thosar, Satish

Abstract

In this paper, the authors estimate the hazard function for firms that are targets in unsolicited tender offers. The data support a Weibull-gamma specification and imply a hazard rate that increases sharply in the initial period following the bid announcement, after which it declines steadily. In explaining the hazard, the authors find that the initial bid premium has no explanatory power, while the onset of an auction and the proportion of institutional ownership in the target firm significantly enhance the hazard. Legal and financial restructuring actions by target management are effective in reducing the hazard, thereby prolonging the contest.

Suggested Citation

  • Jaggia, Sanjiv & Thosar, Satish, 1995. "Contested Tender Offers: An Estimate of the Hazard Function," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(1), pages 113-119, January.
  • Handle: RePEc:bes:jnlbes:v:13:y:1995:i:1:p:113-19
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    Cited by:

    1. Alan Marco & Gordon Rausser, 2011. "Complementarities and spillovers in mergers: an empirical investigation using patent data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(3), pages 207-231.
    2. James E. Prieger, "undated". "Conditional Moment Tests for Parametric Duration Models," Department of Economics 00-10, California Davis - Department of Economics.
    3. Eduardo Beamonte & José Bermúdez, 2003. "A bayesian semiparametric analysis for additive Hazard models with censored observations," TEST: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 12(2), pages 347-363, December.
    4. Bandopadhyaya, Arindam & Jaggia, Sanjiv, 2001. "An analysis of second time around bankruptcies using a split-population duration model," Journal of Empirical Finance, Elsevier, vol. 8(2), pages 201-218, May.
    5. Sam K. Hui & Jehoshua Eliashberg & Edward I. George, 2008. "Modeling DVD Preorder and Sales: An Optimal Stopping Approach," Marketing Science, INFORMS, vol. 27(6), pages 1097-1110, 11-12.
    6. Das, Sanghamitra & Srinivasan, Krishna, 1997. "Duration of firms in an infant industry: the case of Indian computer hardware," Journal of Development Economics, Elsevier, vol. 53(1), pages 157-167, June.
    7. Keloharju, Matti & Hukkanen, Petri, 2014. "Initial Offer Precision and M&A Outcomes," Working Paper Series 1038, Research Institute of Industrial Economics.

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