Internet Appendix for “Corporate Acquisitions, Diversification, and the Firm’s Lifecycle”
ASLI M. ARIKAN and RENÉ M. STULZ*
We provide the results of various robustness checks mentioned in the main article in this Internet
Appendix. Specifically:
List of Internet Appendix Tables





IA.I. Conditional acquisition rate by cohort
IA.II. Conditional dollar acquisition rate
IA.III. Conditional dollar acquisition rate of young versus mature firms
IA.IV. Conditional acquisition rate of firms relative to their IPO for each of the quintiles of
age since incorporation
IA. V Conditional acquisition rate of young versus mature firms
Table 2 is extended to include other conditions.

IA.VI Number of Deals Announced in a Year Following IPO
Table 4 is re-estimated using Poisson models

IA.VII. Number of Deals Announced in a Year Following IPO Excluding Financial Services
and Utilities, Penny Stocks and Rollups
Table 4 is re-estimated by excluding financial services, utilities, penny stocks and rollups.

Table IA.VIII. Number of Deals Announced in a Year Following IPO
Table 4 is re-estimated by including industry dummies coded at the two-digit SIC code level.

IA.IX. Number of Deals Announced in a Year Following IPO
Table 4 is re-estimated by including firm-specific misvaluation.

IA.X. Probability of Announcing No Deal, a Related Deal Based on Primary SIC Code or an
Unrelated Deal in a Year Following IPO
Table 5 is re-estimated with a broader definition of relatedness based on primary SIC codes.

IA.XI. Probability of Announcing No Deal, a Related Deal Based on All SIC Codes or an
Unrelated Deal in a Year Following IPO
Table 5 is re-estimated with the inclusion of firm-specific misevaluation

IA.XII. Probability of Announcing No Deal, a Related Deal Based on All SIC Codes or an
Unrelated Deal in a Year Following IPO
Table 5 is re-estimated by excluding financial services, utilities, penny stocks and rollups.
format: Arikan, Asli and René M. Stulz, Internet Appendix for “Corporate Acquisitions,
Diversification, and the Firm’s Lifecycle,” Journal of Finance, DOI:10.1111/jofi.12362 . Please
note: Wiley-Blackwell is not responsible for the content or functionality of any supporting
information supplied by the authors. Any queries (other than missing material) should be directed
to the authors of the article.
*Citation
1
Table IA.I
Conditional Acquisition Rate by Cohort
IPOs are identified using the SDC Global Issues Database. The IPO sample includes all IPOs over the 1975 to 2008 period excluding reverse LBOs, spinoffs, rights and unit
offerings, ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP before their IPO announcement date. Acquisition deals of the IPO firms
include all acquisitions in SDC’s M&A database over 1981 to 2012. Age refers to the year since the IPO year. The conditional acquisition rate is the ratio of acquisitions in a year
divided by the number of firms alive and public at the beginning of that year. Firms' delisting information is obtained from the CRSP database. The highest conditional acquisition
rate for a cohort is in bold.
IPO
Year
Total # of
IPOs
Total # of
Deals
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
5
32
22
28
54
103
241
85
494
221
219
459
324
139
116
105
231
306
475
395
437
650
449
284
435
328
65
13
59
83
77
184
311
726
225
1,297
898
542
2,349
1,197
537
739
773
1,358
1,956
2,136
1,992
2,117
3,194
2,314
1,667
1,958
868
282
2002
67
257
2003
71
268
2004
199
728
2005
154
613
2006
152
373
2007
141
474
2008
20
82
Total
7,506
32,647
Median Conditional Acquisition
Rate of Cohort
Mean Conditional Acquisition
Rate of Cohort
Number of IPO cohorts
Age
0
1
2
3
0.02
0.05
0.13
0.17
0.02
0.06
0.07
0.06
0.13
0.49
0.16
0.33
0.26
0.31
0.36
0.54
0.65
1.04
0.64
0.47
0.23
0.06
0.17
0.32
0.25
0.06
0.14
0.21
0.20
0.36
0.54
0.81
0.66
0.75
0.64
0.81
1.15
1.29
1.64
1.53
1.27
0.48
0.71
0.06
0.10
0.31
0.23
0.12
0.12
0.13
0.23
0.27
0.29
0.50
0.67
0.60
0.70
0.52
0.89
0.95
1.02
0.94
0.85
0.47
0.38
0.72
0.00
0.18
0.21
0.21
0.10
0.17
0.12
0.12
0.34
0.25
0.32
0.46
0.37
0.73
0.60
0.56
0.77
0.77
0.72
0.46
0.48
0.38
0.29
0.61
0.28
0.08
0.18
0.32
0.32
0.38
0.70
0.48
0.93
0.66
0.90
0.66
0.70
0.75
0.64
0.94
0.68
0.81
0.33
0.52
1.05
0.81
0.59
0.60
0.59
0.30
0.67
1.06
4
5
0.06
0.05
0.22
0.14
0.05
0.19
0.09
0.10
0.22
0.28
0.35
0.44
0.59
0.46
0.69
0.80
0.63
0.78
0.49
0.47
0.30
0.60
0.38
0.30
0.52
0.04
0.00
0.15
0.30
0.06
0.08
0.20
0.12
0.22
0.29
0.28
0.32
0.43
0.60
0.47
0.50
0.66
0.51
0.52
0.36
0.33
0.33
0.56
0.49
0.30
0.39
0.74
0.46
0.31
0.37
0.45
0.93
1.00
0.53
0.35
0.40
0.60
0.36
0.73
6
0.00
0.09
0.00
0.58
0.10
0.14
0.10
0.10
0.17
0.16
0.19
0.35
0.34
0.44
0.71
0.64
0.53
0.64
0.49
0.44
0.26
0.31
0.38
0.69
0.62
0.27
0.63
7
0.00
0.14
0.00
0.05
0.09
0.07
0.09
0.17
0.21
0.26
0.26
0.46
0.47
0.52
0.46
0.53
0.51
0.69
0.46
0.32
0.24
0.34
0.39
0.54
0.60
0.33
0.59
8
0.67
0.18
0.00
0.11
0.29
0.11
0.25
0.22
0.22
0.31
0.18
0.47
0.47
0.43
0.51
0.62
0.43
0.41
0.29
0.27
0.28
0.38
0.52
0.61
0.64
0.29
0.26
9
0.00
0.00
0.25
0.31
0.20
0.22
0.22
0.39
0.30
0.42
0.18
0.52
0.51
0.53
0.55
0.78
0.43
0.45
0.34
0.27
0.25
0.44
0.43
0.35
0.54
0.29
0.30
10
0.00
0.08
0.43
0.53
0.19
0.21
0.25
0.39
0.34
0.40
0.27
0.54
0.50
0.27
0.43
1.06
0.30
0.42
0.29
0.36
0.34
0.32
0.48
0.38
0.28
0.29
0.21
0.48
0.21
0.57
0.62
0.47
0.19 0.40 0.22 0.42
0.31 0.51 0.42
0.64 0.64
0.53
11
0.00
0.00
0.57
0.57
0.28
0.20
0.20
0.17
0.30
0.49
0.34
0.58
0.65
0.37
0.61
0.21
0.33
0.44
0.28
0.25
0.43
0.34
0.36
0.28
0.47
0.25
0.53
12
0.00
0.09
0.67
0.67
0.43
0.30
0.24
0.27
0.39
0.70
0.31
0.60
0.36
0.36
0.53
0.32
0.24
0.47
0.31
0.38
0.50
0.31
0.19
0.37
0.46
0.33
13
0.33
0.10
0.17
0.00
0.45
0.41
0.41
0.18
0.39
0.49
0.47
0.97
0.53
0.33
0.53
0.27
0.42
0.66
0.46
0.31
0.39
0.27
0.33
0.45
0.49
14
0.33
0.20
0.50
0.44
0.45
0.19
0.43
0.17
0.53
0.76
0.28
0.63
0.36
0.24
0.58
0.65
0.45
0.54
0.17
0.33
0.17
0.32
0.27
0.33
15
1.00
0.30
0.17
0.33
0.40
0.26
0.35
0.24
0.48
0.78
0.24
0.46
0.33
0.26
0.63
0.58
0.43
0.49
0.22
0.18
0.28
0.39
0.43
16
0.00
0.10
0.50
0.11
0.44
0.41
0.53
0.29
0.40
0.79
0.15
0.40
0.34
0.24
0.72
0.97
0.47
0.34
0.22
0.21
0.43
0.44
17
0.33
0.20
0.83
0.38
0.63
0.34
0.52
0.26
0.23
0.72
0.19
0.64
0.37
0.18
0.71
0.72
0.42
0.25
0.25
0.44
0.40
18
0.33
0.60
0.33
0.75
0.38
0.50
0.60
0.14
0.22
0.50
0.24
0.48
0.21
0.26
0.86
0.69
0.43
0.33
0.18
0.33
19
0.33
0.30
1.67
0.29
0.64
0.73
0.55
0.05
0.16
0.59
0.51
0.90
0.29
0.31
0.92
0.50
0.37
0.39
0.20
20
0.00
0.50
0.83
0.67
0.85
0.42
0.32
0.22
0.19
1.00
0.58
1.07
0.39
0.32
0.39
1.10
0.53
0.52
21
0.00
0.44
0.80
0.17
0.33
0.53
0.33
0.33
0.28
0.56
0.47
0.94
0.18
0.12
0.48
1.28
0.45
22
0.00
0.88
0.80
0.83
0.10
0.56
0.56
0.29
0.24
0.61
0.40
0.95
0.23
0.25
0.45
1.39
23
0.00
0.50
0.40
0.00
0.40
0.41
0.65
0.50
0.19
0.90
0.82
0.47
0.33
0.27
0.58
24
0.50
0.50
0.25
0.00
0.60
0.59
0.78
0.00
0.20
1.17
0.26
0.53
0.18
0.14
25
0.00
0.00
0.25
0.00
0.44
0.38
0.68
0.15
0.07
0.90
0.19
0.82
0.31
0.30 0.66 0.53 0.45 0.42 0.36 0.37 0.34 0.37 0.35 0.36 0.35 0.38 0.39 0.39 0.40 0.39 0.43 0.42 0.51 0.55 0.45 0.53 0.43 0.41 0.32
29
30
31
32
32
32
31
30
29
28
0.00
0.18
0.37
0.29
0.35
0.26
0.31
0.21
0.22
0.50
0.25
0.50
0.34
0.31
0.55
0.64
0.44
0.49
0.30
0.33
0.37
0.38
0.41
0.54
0.49
0.30
0.53
0.48
0.44
0.60
0.59
0.36
0.68
1.00
0.27 0.66 0.52 0.46 0.41 0.35 0.36 0.33 0.35 0.34 0.34 0.34 0.36 0.41 0.35 0.35 0.40 0.38 0.35 0.39 0.51 0.44 0.50 0.41 0.38 0.25
28
Median Conditional Mean Conditional
Acquisition Rate of Acquisition Rate
Cohort
of Cohort
27
26
25
2
24
23
22
21
20
19
18
17
16
15
14
13
0.19
0.25
0.43
0.30
0.35
0.30
0.34
0.22
0.25
0.51
0.29
0.55
0.34
0.31
0.56
0.68
0.46
0.52
0.36
0.43
0.45
0.48
0.51
0.61
0.55
0.33
0.47
0.47
0.48
0.52
0.59
0.41
0.66
0.91
Table IA.II
Conditional Dollar Acquisition Rate
IPOs are identified using the SDC Global Issues Database. The IPO sample includes all IPOs from 1975 to 2008 excluding reverse LBOs, spinoffs, rights and unit offerings,
ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP before their IPO announcement date. Acquisition deals of the IPO firms include all
acquisitions in SDC’s M&A database from 1981 to 2012. We further exclude firms with at least one missing transaction value from both the numerator and the denominator for
that year. Age refers to the year since the IPO year. The conditional dollar acquisition rate is the ratio of the total considerations paid by all firms in an IPO cohort for all of their
deals during year t divided by the total assets of the firms in that cohort at the beginning of year t. Deal size is reported by SDC as the transaction value. Total asset value is
obtained from the COMPUSTAT/CRSP merged database maintained by WRDS.
IPO
Year
Total # of Deals Announced by
Firms with No Missing Transaction
Value in a Given Year
1975
8
1976
17
1977
32
1978
22
1979
55
1980
136
1981
249
1982
75
1983
423
1984
201
1985
198
1986
547
1987
384
1988
225
1989
256
1990
243
1991
446
1992
573
1993
994
1994
635
1995
775
1996
1,056
1997
656
1998
575
1999
869
2000
497
2001
133
2002
132
2003
148
2004
351
2005
232
2006
212
2007
165
2008
11
Total
11,531
Median Conditional Dollar Acquisition
Rate of Cohort
Mean Conditional Dollar Acquisition Rate
of Cohort
Number of IPO cohorts
Age
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Median Conditional Mean Conditional
Dollar Acquisition Dollar Acquisition
Rate of Cohort
Rate of Cohort
0.017
0.062
0.007
0.016
0.006
0.042
0.013
0.007
0.034
0.118 0.000 0.031 0.001 0.016 0.049 0.008
0.004
0.014
0.012 0.017 0.013 0.022 0.002 0.035 0.003 0.024 0.026 0.002 0.015 0.004 0.012 0.023 0.015 0.009 0.071 0.298 0.076 0.011 0.004 0.035 0.006 0.026 0.021
0.015
0.031
0.007
0.034
0.039
0.089 0.002 0.001 0.002 0.047 0.021 0.000 0.001 0.003 0.004 0.012 0.008 0.003 0.000
0.004
0.020
0.012 0.009 0.022 0.013 0.005 0.010 0.009 0.001 0.000 0.002 0.008 0.002 0.016 0.014 0.005 0.005 0.002 0.031 0.055 0.004 0.012 0.023 0.015 0.007 0.002 0.002
0.008
0.011
0.018 0.031 0.046 0.024 0.046 0.007 0.007 0.004 0.006 0.030 0.007 0.011 0.012 0.020 0.096 0.028 0.017 0.010 0.002 0.001 0.000 0.097
0.003 0.003 0.007
0.011
0.021
0.001 0.023 0.035 0.014 0.004 0.003 0.001 0.003 0.041 0.000 0.002 0.020 0.042 0.027 0.005 0.002 0.001 0.001 0.001 0.002 0.005 0.002 0.004 0.001 0.002 0.000
0.002
0.009
0.007 0.017 0.021 0.011 0.007 0.017 0.008 0.021 0.034 0.008 0.016 0.063 0.020 0.028 0.010 0.008 0.001 0.007 0.003 0.019 0.028 0.001 0.001 0.022 0.007 0.001
0.011
0.015
0.029 0.013 0.010 0.009 0.024 0.004 0.003 0.025 0.018 0.013 0.028 0.018 0.045 0.062 0.112 0.009 0.007 0.003 0.002 0.003
0.013
0.021
0.005 0.101 0.019 0.016 0.051 0.023 0.067 0.026 0.048 0.121 0.319 0.014 0.004 0.041 0.014 0.009 0.004 0.004 0.045 0.018 0.013 0.000 0.015 0.007
0.017
0.041
0.020 0.016 0.076 0.017 0.032 0.040 0.093 0.072 0.034 0.357 0.010 0.175 0.011 0.063 0.016 0.067 0.017 0.006 0.006 0.080 0.003 0.001 0.127
0.032
0.058
0.064 0.051 0.052 0.008 0.043 0.042 0.083 0.009 0.030 0.059 0.072 0.018 0.030 0.016 0.007 0.007 0.021 0.142 0.018
0.030
0.038
0.004 0.042 0.022 0.066 0.075 0.069 0.016 0.036 0.018 0.033 0.042 0.009 0.087 0.034 0.023 0.008 0.099 0.011 0.013 0.008 0.024
0.024
0.035
0.007 0.020 0.013 0.015 0.021 0.026 0.010 0.008 0.004 0.013 0.003 0.055 0.006 0.013 0.027 0.013 0.001 0.009 0.005 0.011
0.012
0.014
0.033 0.057 0.060 0.046 0.087 0.109 0.060 0.055 0.022 0.019 0.020 0.035 0.009 0.043 0.023 0.020 0.027 0.018 0.007 0.045
0.034
0.040
0.012 0.067 0.112 0.108 0.054 0.050 0.039 0.023 0.031 0.022 0.021 0.016 0.192 0.008 0.018 0.012 0.001 0.102 0.003
0.023
0.047
0.091 0.072 0.200 0.051 0.027 0.026 0.093 0.003 0.007 0.003 0.004 0.008 0.020 0.007 0.006 0.008 0.029 0.006
0.014
0.037
0.031 0.098 0.090 0.094 0.060 0.020 0.034 0.018 0.019 0.013 0.021 0.012 0.013 0.012 0.012 0.008 0.011
0.019
0.033
0.012 0.136 0.362 0.045 0.044 0.020 0.017 0.016 0.074 0.012 0.033 0.004 0.008 0.001 0.015 0.005
0.016
0.050
0.062 0.134 0.333 0.044 0.054 0.024 0.026 0.035 0.123 0.027 0.034 0.011 0.115 0.022 0.040
0.040
0.072
0.201 0.844 0.057 0.028 0.014 0.051 0.022 0.045 0.021 0.074 0.007 0.028 0.010 0.040
0.034
0.103
0.085 0.039 0.012 0.021 0.005 0.050 0.006 0.082 0.011 0.033 0.004 0.001 0.026
0.021
0.029
0.005 0.015 0.010 0.025 0.004 0.003 0.003 0.003 0.001 0.004 0.001 0.002
0.003
0.006
0.039 0.038 0.080 0.045 0.270 0.042 0.005 0.004 0.002 0.018 0.012
0.038
0.050
0.009 0.063 0.060 0.063 0.041 0.005 0.002 0.006 0.002 0.014
0.011
0.027
0.014 0.099 0.075 0.081 0.015 0.028 0.027 0.021 0.051
0.028
0.046
0.128 0.149 0.116 0.017 0.046 0.027 0.160 0.045
0.081
0.086
0.076 0.184 0.020 0.010 0.044 0.068 0.043
0.046 0.218 0.024 0.082 0.031 0.093
0.017 0.005 0.016 0.011
0.044
0.064
0.064
0.013
0.082
0.012
567
567
0.001 0.007
0.008
0.022 0.230 0.236
0.017
0.006 0.021 0.013 0.012
0.007 0.007
0.002
0.020 0.059 0.019 0.047 0.005 0.002 0.020
0.008
0.002 0.078 0.018
0.012 0.002 0.004 0.015
0.002
0.007 0.000 0.038
0.007
0.153
0.001
0.004
0.000
0.293 0.002 0.022 0.000 0.000
0.005 0.016 0.002 0.001 0.001 0.002 0.003 0.005 0.003 0.000
0.007 0.048 0.087 0.098 0.014 0.003 0.109 0.040 0.066 0.040 0.011 0.016 0.007 0.052 0.002 0.039 0.127 0.056 0.029 0.041 0.006 0.004 0.022
0.001 0.065 0.025 0.084 0.050 0.069 0.001 0.001 0.005 0.001 0.012
0.003
0.027 0.003
0.018 0.051 0.040 0.025 0.032 0.024 0.022 0.018 0.019 0.016 0.011 0.015 0.014 0.020 0.014 0.008 0.009 0.010 0.006 0.018 0.009 0.004 0.012 0.006 0.003 0.007
0.038 0.092 0.069 0.039 0.040 0.031 0.037 0.023 0.026 0.036 0.028 0.025 0.035 0.024 0.030 0.024 0.022 0.033 0.032 0.044 0.014 0.016 0.023 0.007 0.011 0.008
27
29
30
30
30
31
29
27
27
27
25
23
22
23
3
23
21
19
20
15
17
16
14
13
10
9
10
Table IA.III.
Conditional Acquisition Rate of Young versus Mature Firms
IPOs are identified using the SDC Global Issues Database. The IPO sample includes all IPOs over the 1975 to 2008 period excluding reverse LBOs, spinoffs, rights and unit
offerings, ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP before their IPO announcement date. Acquisition deals of the IPO firms
include all acquisitions in SDC’s M&A database over 1981 to 2012. The Restricted Sample includes only completed acquisitions in which 100% of the equity is acquired. Age
refers to the number of years since IPO year. The conditional acquisition rate is the ratio of acquisitions of a given type in a year divided by the number of firms that are alive and
public at the beginning of the year. IPOs with offer prices below $5 are penny stocks. Rollups are identified using Jay Ritter’s data set available online at
http://bear.warrington.ufl.edu/ritter/Rollup%20Information.htm and described in Ritter (2015). High technology IPOs have primary SIC codes as 3571, 3572, 3575, 3577, 3578
(computer hardware), 3661, 3663, 3669 (communications equipment), 3671, 3672, 3674, 3675, 3677, 3678, 3679 (electronics), 3812 (navigation equipment), 3823, 3825, 3826,
3827, 3829 (measuring and controlling devices), 3841, 3845 (medical instruments), 4812, 4813 (telephone equipment), 4899 (communications services), and 7371, 7372, 7373,
7374, 7375, 7378, and 7379 (software) following Loughran and Ritter (2004). IPO underpricing is calculated as the percentage initial return (P 1-P0)*100/P0, where P1 is the firstday closing stock price or bid-ask average (from CRSP) and P 0 is the IPO offer price. IPO return quintiles are formed using all IPOs with available data. The merger wave covers
1986, 1987, 1996, and 1998 to 2000 following Maksimovic, Phillips, and Yang (2013). Delisting rate at the 2-digit SIC is calculated as [the number of firms delisted in year t1/firms alive as of beginning of year t-1]. The method of payment is reported by SDC for deals classified as having disclosed the transaction details. IPO market is classified as hot
(4th and 5th quintiles), cold (1st quintile), or neutral (2nd and 3rd quintiles) based on a quintile ranking of the quarterly number of IPOs following Colak, Wang, and Yung (2008).
The target’s organizational form is classified using the data available in SDC into private, public, subsidiary, and unknown. *, **, and *** denote statistical significance at the 10%,
5%, and 1% level, respectively. The tests of means use a t-statistic and the tests of proportions use a z-statistic.
Young
(1)
Mean conditional acquisition rate excluding
Financial services and utilities
Firms that survived less than 10 years
Mean conditional acquisition rate by
Penny stocks
(1) Not a penny stock
(2) Penny stock
Test of means: (1)-(2)
High technology IPO (Loughran and Ritter (2004))
(1) Not a high technology IPO
(2) High technology IPO
Test of means: (1)-(2)
Rollup stocks
(1) Not a rollup stock
(2) Rollup stock
Test of means: (1)-(2)
IPO return quintiles (all IPOs)
(1) Quintile 1
(2) Quintile 2
(3) Quintile 3
(4) Quintile 4
(5) Quintile 5
4
All Acquisitions
Mature
Test of means
(2)
(1)-(2)
0.538
0.575
0.416
0.373
1.82*
2.25**
0.58
0.30
2.66**
0.46
0.21
3.44***
1.92*
0.82
0.56
0.54
0.19
0.53
1.62
-2.87***
0.52
0.50
0.62
0.73
0.56
0.35
0.67
-2.44**
3.22***
-0.91
0.42
0.25
1.93*
1.97*
3.53***
0.32
0.36
0.43
0.47
0.57
3.08***
1.86*
1.83*
1.70*
-0.08
Test of means:(1)-(5)
Acquisition year (Maksimovic, Phillips, and Yang (2013))
(1) Merger wave in 1986, 1987, 1996, and 1998 to 2000
(2) Other
Test of means: (1)-(2)
Industry delisting rate by acquisitions
(1) Quintile 1
(2) Quintile 2
(3) Quintile 3
(4) Quintile 4
(5) Quintile 5
Test of means:(1)-(5)
Relatedness across primary SICs
(1) Not in the same two-digit primary SIC
(2) In the same two-digit primary SIC
Test of proportions: (1)-(2)
Relatedness across primary Fama-French (FF) two-digit SIC
(1) Not in the same primary FF two-digit SIC
(2) In the same primary FF two-digit SIC
Test of proportions: (1)-(2)
Relatedness across FIC-100 (Hoberg and Phillips (2010))
Matched by industry/year
(1) Not in the same FIC-100 - Public Targets
(2) In the same FIC-100 - Public Targets
Unmatched by industry/year
(3) Not in the same 2-digit primary SIC - Public Targets
(4) In the same 2-digit primary SIC - Public Targets
(5) Not in the same 2-digit primary SIC - Private Targets
(6) In the same 2-digit primary SIC - Private Targets
(7) Not in the same 2-digit primary SIC - Sub. Targets
(8) In the same 2-digit primary SIC - Sub. Targets
Test of proportions: (1)-(2)
Test of proportions: (1)-(3)
Test of proportions: (2)-(4)
IPO year and method of payment
Neutral IPO
(1) Cash
(2) Stock
(3) Unknown
Test of proportions: (1)-(2)
5
-0.37
-3.10***
0.70
0.50
1.30
0.57
0.43
1.81*
0.85
1.21
0.61
0.61
0.73
0.62
0.54
0.64
0.52
0.35
0.41
0.41
0.48
0.27
0.51
2.18**
2.35**
2.45**
0.79
0.19
0.34
-1.30
0.13
0.27
-1.25
2.71***
1.63
0.18
0.36
-3.57***
0.18
0.23
-1.95*
-0.02
2.56**
0.007
0.009
0.007
0.011
0.01
0.02
0.13
0.23
0.05
0.09
-0.06
-0.19
-0.26
0.01
0.03
0.08
0.15
0.04
0.08
-0.11
-0.09
-0.37
0.16
0.07
0.30
0.88
0.14
0.04
0.25
0.87
-0.26
-0.83
1.74*
-1.78*
3.65***
2.47**
1.46
1.31
1.01
1.53
0.87
Hot IPO
(4) Cash
(5) Stock
(6)Unknown
Test of proportions: (4)-(5)
Cold IPO
(7) Cash
(8) Stock
(9) Unknown
Test of proportions: (7)-(8)
Test of proportions for cash: (4)-(7)
Test of proportions for stock: (5)-(8)
6
0.16
0.08
0.40
0.49
0.13
0.03
0.24
0.81
0.16
0.05
0.23
1.15
-0.02
-0.63
0.18
0.09
0.25
0.74
-0.35
-0.63
1.01
1.53
0.87
-0.4
-1.70*
-0.3
Table IA.IV
Conditional Dollar Acquisition Rate of Young versus Mature Firms
IPOs are identified using the SDC Global Issues Database. The IPO sample includes all IPOs from 1975 to 2008 excluding reverse LBOs, spinoffs, rights and unit offerings,
ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP before their IPO announcement date. Acquisition deals of the IPO firms include all
acquisitions in SDC’s M&A database from 1981 to 2012. We further exclude firms with at least one missing transaction value from both the numerator and the denominator for
that year. Age refers to the year since the IPO year. The conditional dollar acquisition rate is the ratio of the total considerations paid by all firms in an IPO cohort for all of their
deals during year t divided by the total assets of the firms in that cohort at the beginning of year t. Deal size is reported by SDC as the transaction value. Total asset value is
obtained from the COMPUSTAT/CRSP merged database maintained by WRDS. The IPO market is classified as hot (4th and 5th quintiles), cold (1st quintile), or neutral (2nd and 3rd
quintiles) based on a quintile ranking of the quarterly number of IPOs following Colak, Wang, and Yung (2008). The Merger Wave equals one for deals in the period from 1995 to
2000. IPO underpricing is calculated as the percentage initial return (P 1-P0)*100/P0, where P1 is the first-day closing stock price or bid-ask average (from CRSP) and P 0 is the IPO
offer price. The IPO underpricing quintiles are obtained using the subsample of 7,271 IPOs (out of 7,506) for which we have data, and the lowest quintile corresponds to the IPOs
with the lowest first-day returns. The method of payment is reported by SDC for deals classified as having disclosed the transaction details. The target’s organizational form is
classified using the data available in SDC into private, public, subsidiary, and unknown. *, **, *** denote statistical significance at the 10%, 5%, and 1% level, respectively. The
tests of means use t-statistics and the tests of proportions use z-statistics.
Young
(1)
Mean conditional dollar acquisition rate
All
IPO year
(1) Hot
(2) Cold
Neutral
Test of means: (1)-(2)
IPO return quintiles (IPO cohort)
(1) Quintile 1
(2) Quintile 2
(3) Quintile 3
(4) Quintile 4
(5) Quintile 5
Test of means:(1)-(5)
Acquisition year
(1) Merger Wave
(2) Other
Test of means: (1)-(2)
Relatedness across all SICs
(1) Not in the same 2-digit SIC
(2) In the same 2-digit SIC
Test of proportions: (1)-(2)
Target's status
(1) Private
(2) Public
(3) Subsidiary
Test of proportions: (1)-(2)
Method of payment
(1) Cash
(2) Stock
(3) Both
(4) Unknown
Test of proportions: (1)-(2)
0.07
0.11
0.03
0.09
2.43**
0.28
0.36
0.16
0.19
1.22
-0.83
0.13
0.05
2.96**
All Acquisitions
Mature
(2)
Test of Means
(1)-(2)
Young
(1)
Restricted Acquisitions
Mature
Test of Means
(2)
(1)-(2)
0.03
2.98***
0.05
0.02
2.66**
0.03
0.03
0.02
-0.01
2.60**
0.59
3.32***
0.09
0.03
0.07
2.04*
0.02
0.02
0.02
-0.76
2.51**
0.94
3.22***
0.03
0.02
0.02
0.04
0.05
-0.93
1.16
1.15
1.49
1.34
1.06
0.02
0.02
0.02
0.03
0.05
-1.18
1.13
1.11
1.53
1.41
1.08
0.27
0.33
0.13
0.17
0.82
-0.75
0.08
0.02
2.77**
1.47
2.36**
0.12
0.04
2.79**
0.07
0.02
2.72**
1.33
3.12***
0.01
0.06
-1.06
0.004
0.02
-0.64
1.52
2.76***
0.006
0.04
-0.94
0.004
0.02
-0.54
0.86
2.61**
0.02
0.03
0.02
-0.21
0.004
0.01
0.01
-0.38
3.81***
1.58
1.63
0.01
0.02
0.02
-0.06
0.004
0.01
0.01
-0.28
3.03***
1.03
2.07**
0.02
0.02
0.01
0.02
-0.06
0.01
0.01
0.004
0.005
0.17
1.64
1.54
0.92
2.89***
0.01
0.02
0.004
0.01
-0.03
0.01
0.01
0.003
0.005
0.11
1.87*
1.49
0.64
2.19**
7
Mean fraction of acquisition size
Relatedness across all SICs
(1) Not in the same 2-digit SIC
(2) In the same 2-digit SIC
Test of proportions: (1)-(2)
Target's status
(1) Private
(2) Public
(3) Subsidiary
Test of proportions: (1)-(2)
Method of payment
(1) Cash
(2) Stock
Both
Unknown
Test of proportions: (1)-(2)
0.18
0.82
-4.90***
0.15
0.85
-5.25***
0.83
-0.83
0.18
0.82
-4.91***
0.16
0.84
-5.01***
0.37
-0.37
0.36
0.28
0.35
0.61
0.35
0.31
0.32
0.32
0.03
-0.67
0.56
0.39
0.24
0.35
1.27
0.38
0.28
0.33
0.79
0.25
-0.92
1.06
0.39
0.23
0.11
0.33
1.39
0.53
0.16
0.22
0.25
2.95***
-2.68***
1.58
-3.46***
1.25
0.40
0.22
0.08
0.31
1.51
0.52
0.16
0.10
0.21
2.85***
-2.23**
1.24
-1.13
1.72*
8
Table IA.V
Conditional Acquisition Rate of Firms Relative to Their IPO for Each of the Quintiles of Age since Incorporation
IPOs are identified using the SDC Global Issues Database. The IPO sample includes all IPOs from 1975 to 2008 period excluding reverse LBOs, spinoffs, rights and unit offerings,
ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP before their IPO announcement date. Acquisition deals of the IPO firms include all
acquisitions in SDC’s M&A database from 1981 to 2012. IPO founding dates are compiled from SDC Platinum and the Field-Ritter data set of company founding dates (Field and
Kappa, 2002; Loughran and Ritter, 2004). Age refers to number of years since the IPO year. The acquisition rate is the number of acquisition announcements of an IPO cohort in
year t divided by the number of firms in that cohort that are alive at the beginning of year t. The acquisition frequency is the fraction of acquisitions that have a given characteristic.
IPO age is calculated as the number of years from the founding date to the IPO year. The IPO age quintiles are obtained using the subsample of 6,932 IPOs (out of 7,506) for
which we have data. *, **, and *** denote statistical significance at the 10%, 5%, and 1% level, respectively. The tests of means use t-statistics and the tests of proportions use zstatistics.
Panel A. IPO Age Statistics
All IPOs
Median Values across IPO Cohorts
IPO Age Quintiles
Total #
Total #
Std.
Std.
Mean
Median
Min
Max
of IPO
Mean
Median
Min
Max
of IPOs
Dev.
Dev.
Cohorts
1
1,440
1.75
2
1.32
0
10
33
2.18
2
1.24
0
5
2
1,387
4.48
4
1.52
2
31
33
4.92
5
1.54
3
9
3
1,382
7.72
7
2.57
4
67
33
7.94
8
1.82
4
13
4
1,387
14.85
13
6.62
5
72
33
14.80
14
4.16
7
26
5
1,336
48.12
40
27.58
11
165
33
43.94
38
21.67
18
97
Total
6,932
15.04
20.93
Panel B. Conditional Acquisition Rate of Young versus Mature Firms
Total number of acquisitions
Total number of completed acquisitions for which the buyer had less
than 50% of the target before and more than 50% after the deal
Mean conditional acquisition rate
IPO cohort mean conditional acquisition rate by age quintiles since
incorporation
Quintile 1
Quintile 2
Quintile 3
Quintile 4
Quintile 5
Test of means: (1)-(5)
Completed Acquisitions
Test of
Young
Mature
means
(1)
(2)
(1)-(2)
12,342
6,728
10,060
5,395
0.42
0.31
0.43
0.39
0.55
0.42
0.44
-0.10
0.26
0.34
0.39
0.29
0.32
-0.86
9
Panel C. Conditional Acquisition Rate for the First Four
Years after the IPO and for the IPO Year
Completed Acquisitions
Test of
Event year
means
0
1
2
3
4
1-4
1,938
4,455
3,212
2,393
1,940
2.13**
0.24
0.53
0.43
0.36
0.33
2.50**
2.01**
0.79
0.89
1.85*
1.5
0.29
0.18
0.31
0.22
0.24
0.51
0.59
0.48
0.59
0.51
0.57
0.11
0.41
0.41
0.63
0.43
0.47
-0.61
0.35
0.335
0.495
0.365
0.34
0.13
0.32
0.32
0.51
0.35
0.26
0.77
2.12**
1.94*
0.34
1.90*
2.91***
Table IA.VI.
Number of Deals Announced in a Year Following IPO
We estimate Table IV with Poisson models as random effects regressions using the Generalized Equation Estimation method and specify all time-varying covariates as deviations
from firm-specific means to achieve as close a model as feasible to a true fixed effects model. IPOs are identified using the SDC Global Issues Database. The IPO sample includes
all IPOs from 1975 to 2008 excluding reverse LBOs, spinoffs, rights and unit offerings, ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP
before their IPO announcement date. Acquisition deals of the IPO firms include all acquisitions in SDC’s M&A database from 1981 to 2012. The dependent variable is the total
number of acquisitions made by firm i in year t. Age refers to the number of years since the IPO year. New Firm Rate two-digit SIC, t-1 is calculated as ((the number of IPOs in
year t-1/firms alive as of beginning of year t-1). Delisting Rate at the two-digit SIC, t-1 is calculated as (the number of firms delisted in year t-1/firms alive as of beginning of year
t-1). ((BAA-AAA)) Spreadt-1 is the difference between the Moody’s BAA and the AAA rates in year t-1. Corporate bonds above BBB by S&P correspond to High Investment Grade
Bondt-1. The book values of the acquirer’s accounting variables are measured at the end of fiscal year t-1, which is the year-end immediately preceding announcement year t. Stock
Return t-1 is calculated as (Closing Stock Pricet-1+Dividendst-1-Closing Stock Pricet-2)/ (Closing Stock Pricet-2). We use the first-day closing stock price or bid-ask average (from
CRSP) as the closing stock price at t-2 for t=1. Debt t-1 (sum of the current and long term liabilities), Capital Expenditure t-1, Operating Cash-Flow t-1 (operating income before
depreciation, interest, and related expenses) , and Cash & Short-Term Investments t-1 are divided by the book value of fiscal year-end Total Assets t-1. Industry median at the fourdigit SIC level is further subtracted from Cash & Short Term Investments t-1/Total Assetst-1 ratio following Harford, Mansi, and Maxwell (2008). (2008). Merger Wave t equals one
if the deal is in the period from 1995 to 2000. Delisting Rate t-1 at the two-digit SIC, t-1 is calculated as (the number of firms delisted in year t-1/firms alive as of beginning of year
t-1).Tobin’s Q, TQ t-1, is calculated as ((common shares outstanding*fiscal year-end closing price) + Debt t-1)/Total Assets t-1). The book values of the acquirer’s accounting
variables are measured at the end of the fiscal year t-1, which is the year end immediately preceding the announcement year t. All firm-level continuous lagged variables are
demeaned and Stock Return t-1 is further standardized at the firm level. Event year zero corresponds to the year the IPO drops out of the regressions when lagged accounting
variables are included. We used the data for the fiscal year-end of the IPO year to calculate lagged values for the first event year following the IPO (event year=1). Standard errors
are presented under the coefficients. *, **, *** denote statistical significance at the 10%, 5%, and 1% level, respectively.
Age
Age2
All
(2)
(1)
-0.04***
0.01
0.002***
0.0004
Age 4-9 Years
0.06**
0.02
-0.33***
0.03
-0.37***
0.06
0.06**
0.02
0.15***
0.03
0.16***
0.03
Age > 9 Years
New Firm Rate2-digit SIC,t-1
New Firm Rate2-digit SIC,t-1*Age 4-9 Years
New Firm Rate2-digit SIC,t-1*Age >9 Years
Delisting Rate via Acquisitions2-digit SIC,t-1
Delisting Rate via Acquisitions2-digit SIC,t-1*Age 4-9 Years
Delisting Rate via Acquisitions2-digit SIC,t-1*Age >9 Years
10
(3)
-0.15***
0.05
-0.51***
0.07
0.03
0.02
0.04
0.04
0.1
0.07
0.11***
0.03
0.04
0.03
0.08
0.05
Young
(4)
Middle
(5)
Mature
(6)
0.06**
0.03
0.07*
0.04
0.16**
0.06
0.10***
0.03
0.15***
0.03
0.19***
0.05
[BAA-AAA] Spreadt-1
High Investment-Grade Bondt-1
-0.51***
0.05
1.47***
0.16
-0.49***
0.05
1.47***
0.15
0.94***
0.06
0.93***
0.06
0.05***
0.01
0.06***
0.01
-1.17***
0.13
-1.16***
0.12
-0.36*
0.22
-0.44**
0.22
High Investment-Grade Bondt-1*Age 4-9 Years
High Investment-Grade Bondt-1*Age >9 Years
Low Investment-Grade Bondt-1
Low Investment-Grade Bondt-1*Age 4-9 Years
Low Investment-Grade Bondt-1*Age >9 Years
Returnt-1
Returnt-1*Age 4-9 Years
Returnt-1*Age >9 Years
[Debt/Total Assets]i,t-1
[Debt/Total Assets]i,t-1*Age 4-9 Years
[Debt/Total Assets]i,t-1*Age >9 Years
[Capital Exp./Total Assets]i,t-1
[Capital Exp./Total Assets]i,t-1*Age 4-9 Years
[Capital Exp./Total Assets]i,t-1*Age >9 Years
[Operating Cash Flow/Total Assets]t-1
0.73***
0.07
0.73***
0.07
0.38***
0.03
0.38***
0.03
[Operating Cash Flow/Total Assets]i,t-1*Age 4-9 Years
[Operating Cash Flow/Total Assets]i,t-1*Age >9 Years
Merger Wavet
11
-0.52***
0.05
0.91***
0.22
0.37*
0.22
0.62**
0.27
0.88***
0.10
0.05
0.11
-0.04
0.15
0.13***
0.02
-0.11***
0.04
-0.11***
0.04
-0.89***
0.19
-0.19
0.25
-0.59*
0.32
-1.48***
0.33
2.29***
0.54
1.19
0.74
0.94***
0.10
0.07
0.16
-1.11***
0.22
0.57***
0.05
-0.98***
0.10
0.89***
0.22
-0.46***
0.12
1.28***
0.29
-0.19***
0.06
1.52***
0.18
0.87***
0.10
0.94***
0.07
0.84***
0.11
0.13***
0.02
0.02
0.02
0.02
0.03
-0.88***
0.19
-1.08***
0.18
-1.48***
0.25
-1.45***
0.33
0.81**
0.38
-0.25
0.65
0.92***
0.10
1.01***
0.12
-0.16
0.19
0.39***
0.06
0.28***
0.07
0.40***
0.08
Merger Wavet*Age 4-9 Years
0.09***
0.01
0.09***
0.01
-0.31***
0.07
-0.26***
0.09
0.08***
0.01
0.03
0.03
0.00
0.02
0.23**
0.23**
-0.24*
-0.25*
0.10
0.10
0.14
0.14
Merger Wavet*Age >9 Years
TQi,t-1
TQi,t-1*Age 4-9 Years
TQi,t-1*Age >9 Years
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash & Short Term
Invest./Total Assets]4-Digit SIC Ind. Median,t-1
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash & Short Term Invest./Total Assets]4-Digit SIC Ind. Median,t-1*Age 4-9 Years
0.08***
0.01
0.11***
0.02
0.09***
0.02
0.80***
0.16
0.19
0.22
0.01
0.05
0.48***
0.06
1.04***
0.23
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash & Short Term Invest./Total Assets]4-Digit SIC Ind. Median,t-1*Age >9 Years
Logged Total Assetsi,t-1
0.40
0.02
0.03
0.02
0.03
Logged Total Assetsi,t-1*Age 4-9 Years
Logged Total Assetsi,t-1*Age >9 Years
Constant
Robust std. errors
Number of firms for clustering errors
Number of observations
-0.49***
0.05
Yes
6,143
49,991
-0.43***
0.05
Yes
6,143
49,991
12
0.26
-0.28***
0.03
0.29***
0.05
0.77***
0.07
-0.45***
0.05
Yes
6,143
49,991
-0.28***
0.03
0.17*
0.09
Yes
5,807
14,791
-0.56***
0.11
Yes
4,815
19,607
-1.14***
0.09
Yes
2,371
15,593
Table IA.VII.
Number of Deals Announced in a Year Following IPO Excluding Financial Services and Utilities, Penny Stocks and Rollups
In this table, we re-estimate the models in Table IV and exclude firms in financial services, utilities, as well as IPOs identified as penny stocks, and rollups. IPOs with offer prices
below $5 are penny stocks. Rollups are identified using Jay Ritter’s data set available online at http://bear.warrington.ufl.edu/ritter/Rollup%20Information.htm and described in
Ritter (2015). IPOs are identified using the SDC Global Issues Database. The IPO sample includes all IPOs from 1975 to 2008 excluding reverse LBOs, spinoffs, rights and unit
offerings, ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP before their IPO announcement date. Acquisition deals of the IPO firms
include all acquisitions in SDC’s M&A database from 1981 to 2012. We estimate negative binomial models (models (1), (3), (4), and (6) to (8)), and OLS models (models (2) and
(5)) where the dependent variable is the total number of acquisitions made by firm i in year t. Age refers to the number of years since the IPO year. New Firm Rate two-digit SIC,
t-1 is calculated as ((the number of IPOs in year t-1/firms alive as of beginning of year t-1). Delisting Rate at the two-digit SIC, t-1 is calculated as (the number of firms delisted in
year t-1/firms alive as of beginning of year t-1). ((BAA-AAA)) Spreadt-1 is the difference between the Moody’s BAA and the AAA rates in year t-1. Corporate bonds above BBB by
S&P corresponds to High Investment Grade Bondt-1. The book values of the acquirer’s accounting variables are measured at the end of fiscal year t-1, which is the year-end
immediately preceding announcement year t. Stock Return t-1 is calculated as (Closing Stock Pricet-1+Dividendst-1-Closing Stock Pricet-2)/(Closing Stock Pricet-2). We use the firstday closing stock price or bid-ask average (from CRSP) as the closing stock price at t-2 for t=1. Debt t-1 (sum of the current and long term liabilities), Capital Expenditure t-1,
Operating Cash-Flow t-1 (operating income before depreciation, interest, and related expenses) , and Cash & Short-Term Investments t-1 are divided by the book value of fiscal
year-end Total Assets t-1. Industry median at the four-digit SIC level is further subtracted from Cash & Short Term Investments t-1/Total Assetst-1 ratio following Harford, Mansi, and
Maxwell (2008). (2008). Merger Wave t equals one if the deal is in the period from 1995 to 2000. Delisting Rate t-1 at the two-digit SIC, t-1 is calculated as (the number of firms
delisted in year t-1/firms alive as of beginning of year t-1).Tobin’s Q, TQ t-1, is calculated as ((common shares outstanding*fiscal year-end closing price) + Debt t-1)/Total Assets t-1).
The book values of the acquirer’s accounting variables are measured at the end of the fiscal year t-1, which is the year end immediately preceding the announcement year t. All
firm-level continuous lagged variables are demeaned and Stock Return t-1 is further standardized at the firm level. The dependent variable is also demeaned at the firm level for
models (2) and (5) following Douglas Miller’s suggestion for implementing his STATA code CGMREG. Event year zero corresponds to the year the IPO drops out of the
regressions when lagged accounting variables are included. We used the data for the fiscal year-end of the IPO year to calculate lagged values for the first event year following the
IPO (event year=1). Standard errors are presented under the coefficients. *, **, *** denote statistical significance at the 10%, 5%, and 1% level, respectively.
All
Young
Middle
Mature
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
-0.03***
-0.02***
Age
0.01
0.002
0.002***
0.001***
Age2
0.0004
0.0002
-0.24***
-0.15***
-0.10***
Age 4-9 Years
0.04
0.05
0.02
-0.24***
-0.44***
-0.13***
Age > 9 Years
0.06
0.07
0.02
0.04
0.06***
0.04
0.00
0.05**
0.04
0.02
0.22***
New Firm Rate2-digit SIC,t-1
0.03
0.02
0.03
0.03
0.02
0.03
0.04
0.05
0.02
-0.01
New Firm Rate2-digit SIC,t-1*Age 4-9 Years
0.05
0.02
0.18***
0.06
New Firm Rate2-digit SIC,t-1*Age >9 Years
0.06
0.04
0.24***
0.01
0.24***
0.24***
0.01
0.23***
0.22***
0.24***
Delisting Rate via Acquisitions2-digit SIC,t-1
0.03
0.01
0.03
0.03
0.02
0.03
0.04
0.04
-0.02
-0.01
Delisting Rate via Acquisitions2-digit SIC,t-1*Age 4-9 Years
0.03
0.02
13
Delisting Rate via Acquisitions2-digit SIC,t-1*Age >9 Years
[BAA-AAA] Spreadt-1
High Investment-Grade Bondt-1
-0.39***
0.06
1.61***
0.18
0.23*
0.13
-0.38***
0.06
1.62***
0.18
High Investment-Grade Bondt-1*Age 4-9 Years
High Investment-Grade Bondt-1*Age >9 Years
Low Investment-Grade Bondt-1
0.90***
0.07
-0.05
0.03
0.90***
0.07
Low Investment-Grade Bondt-1*Age 4-9 Years
Low Investment-Grade Bondt-1*Age >9 Years
Returnt-1
0.06***
0.01
0.02**
0.01
0.06***
0.01
-1.16***
0.14
-0.42***
0.06
-1.15***
0.14
-0.25
0.26
-0.32**
0.12
-0.32
0.26
Returnt-1*Age 4-9 Years
Returnt-1*Age >9 Years
[Debt/Total Assets]i,t-1
[Debt/Total Assets]i,t-1*Age 4-9 Years
[Debt/Total Assets]i,t-1*Age >9 Years
[Capital Exp./Total Assets] i,t-1
[Capital Exp./Total Assets] i,t-1*Age 4-9 Years
[Capital Exp./Total Assets] i,t-1*Age >9 Years
[Operating Cash Flow/Total Assets]t-1
1.09***
0.08
0.14***
0.05
1.09***
0.08
[Operating Cash Flow/Total Assets]i,t-1*Age 4-9 Years
[Operating Cash Flow/Total Assets]i,t-1*Age >9 Years
14
0.01
0.05
-0.41***
0.06
1.08***
0.27
0.12
0.31
0.39
0.31
0.76***
0.09
0.11
0.10
0.09
0.15
0.10***
0.02
-0.07*
0.04
-0.04
0.04
-0.87***
0.26
-0.28
0.28
-0.62*
0.35
-1.23***
0.45
1.78***
0.65
1.03
0.78
1.31***
0.11
0.04
0.17
-1.10***
0.22
-0.01
0.02
0.47*
0.28
-0.56*
0.33
-0.18
0.35
0.11*
0.06
-0.18**
0.07
-0.21***
0.07
0.04**
0.02
-0.02
0.02
-0.05***
0.02
-0.61***
0.10
0.21*
0.11
0.30***
0.11
-0.23
0.15
0.01
0.17
-0.48**
0.19
0.16**
0.08
-0.02
0.06
-0.10
0.09
-0.84***
0.12
1.05***
0.26
-0.35**
0.15
1.21***
0.21
-0.13*
0.07
1.46***
0.19
0.75***
0.09
0.87***
0.08
0.86***
0.11
0.10***
0.02
0.03
0.03
0.06*
0.03
-0.85***
0.26
-1.17**
0.45
1.29***
0.11
-1.16***
0.19
0.56
0.38
1.38***
0.13
-1.48***
0.22
-0.16
0.60
0.22
0.18
Merger Wavet
0.37***
0.04
0.37***
0.04
Merger Wavet*Age 4-9 Years
Merger Wavet*Age >9 Years
TQi,t-1
0.09***
0.01
0.07***
0.02
0.09***
0.01
0.39***
0.13**
0.39***
0.11
0.06
0.11
TQi,t-1*Age 4-9 Years
TQi,t-1*Age >9 Years
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash &
Short Term Invest./Total Assets]4-Digit SIC Ind. Median,t-1
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash &
Short -Term Invest./Total Assets]4-Digit SIC Ind. Median,t-1*Age
4-9 Years
0.04
0.04
0.05*
0.03
0.04
0.04
Logged Total Assetsi,t-1*Age 4-9 Years
Logged Total Assetsi,t-1*Age >9 Years
Year
Constant
Robust std. errors
Number of time periods for clustering errors
Number of firms for clustering errors
Number of observations
0.14
1.29***
0.22
0.48*
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash &
Short -Term Invest./Total Assets]4-Digit SIC Ind. Median,t-1*Age
>9 Years
Logged Total Assetsi,t-1
0.46***
0.06
-0.08
0.07
-0.17
0.10
0.10***
0.01
0.01
0.03
-0.04*
0.03
-0.19
-0.66***
0.06
Yes
4,732
39,723
Incl.
-0.43***
0.07
0.27
-0.31***
0.04
0.31***
0.06
0.88***
0.07
-0.61***
0.06
Yes
-0.66***
0.06
Yes
4,732
39,723
4,732
39,723
32
4,732
39,723
15
0.08***
0.01
-0.02
0.02
0.00
0.02
0.08
0.10
0.19*
0.28***
0.07
0.40***
0.08
0.36***
0.08
0.10***
0.01
0.11***
0.03
0.07***
0.02
1.11***
0.30
0.18
0.22
0.01
0.06
0.57***
0.06
-0.20
0.14
0.11
-0.05
0.13
0.03
0.04
-0.03
0.03
0.08
0.05
Incl.
-0.42***
0.09
32
4,732
39,723
-0.31***
0.04
-0.08
0.11
Yes
4,537
11,640
-0.72***
0.15
Yes
-1.23***
0.09
Yes
3,796
15,745
1,867
12,338
Table IA.VIII.
Number of Deals Announced in a Year Following IPO and Industry Effects
This table reports results of model (1) in Table IV with industry dummies based on the 2-digit primary SIC code of the acquirer in a given year t. IPOs are identified using the SDC
Global Issues Database. The IPO sample includes all IPOs from 1975 to 2008 excluding reverse LBOs, spinoffs, rights and unit offerings, ADRs, closed-end funds, REITs, and
IPO firms with stock price data available from CRSP before their IPO announcement date. Acquisition deals of the IPO firms include all acquisitions in SDC’s M&A database
from 1981 to 2012. We estimate negative binomial model where the dependent variable is the total number of acquisitions made by firm i in year t. Age refers to the number of
years since the IPO year. New Firm Rate two-digit SIC, t-1 is calculated as ((the number of IPOs in year t-1/firms alive as of beginning of year t-1). Delisting Rate at the two-digit
SIC, t-1 is calculated as (the number of firms delisted in year t-1/firms alive as of beginning of year t-1). ((BAA-AAA)) Spreadt-1 is the difference between the Moody’s BAA and
the AAA rates in year t-1. Corporate bonds above BBB by S&P corresponds to High Investment Grade Bondt-1. The book values of the acquirer’s accounting variables are
measured at the end of fiscal year t-1, which is the year-end immediately preceding announcement year t. Stock Return t-1 is calculated as (Closing Stock Pricet-1+Dividendst-1Closing Stock Pricet-2)/(Closing Stock Pricet-2). We use the first-day closing stock price or bid-ask average (from CRSP) as the closing stock price at t-2 for t=1. Debt t-1 (sum of the
current and long term liabilities), Capital Expenditure t-1, Operating Cash-Flow t-1 (operating income before depreciation, interest, and related expenses) , and Cash & Short-Term
Investments t-1 are divided by the book value of fiscal year-end Total Assets t-1. Industry median at the four-digit SIC level is further subtracted from Cash & Short Term
Investments t-1/Total Assetst-1 ratio following Harford, Mansi, and Maxwell (2008). (2008). Merger Wave t equals one if the deal is in the period from 1995 to 2000. Delisting Rate t1 at the two-digit SIC, t-1 is calculated as (the number of firms delisted in year t-1/firms alive as of beginning of year t-1).Tobin’s Q, TQ t-1, is calculated as ((common shares
outstanding*fiscal year-end closing price) + Debt t-1)/Total Assets t-1). The book values of the acquirer’s accounting variables are measured at the end of the fiscal year t-1, which is
the year end immediately preceding the announcement year t. All firm-level continuous lagged variables are demeaned and Stock Return t-1 is further standardized at the firm level.
Event year zero corresponds to the year the IPO drops out of the regressions when lagged accounting variables are included. We used the data for the fiscal year-end of the IPO
year to calculate lagged values for the first event year following the IPO (event year=1). Standard errors are presented under the coefficients. *, **, *** denote statistical
significance at the 10%, 5%, and 1% level, respectively.
All
(1)
-0.03***
0.01
0.002***
0.0004
-0.01
0.02
0.13***
0.03
-0.40***
0.05
1.53***
0.14
0.84***
0.06
0.06***
0.01
-1.18***
0.12
-0.09
0.24
Age
Age2
New Firm Rate2-digit SIC,t-1
Delisting Rate via Acquisitions2-digit SIC,t-1
[BAA-AAA] Spreadt-1
High Investment-Grade Bondt-1
Low Investment-Grade Bondt-1
Returnt-1
[Debt/Total Assets]i,t-1
[Capital Exp./Total Assets]i,t-1
16
[Operating Cash Flow/Total Assets]t-1
Merger Wavet
TQi,t-1
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash & Short Term Invest./Total Assets]4-Digit SIC Ind. Median,t-1
Logged Total Assetsi,t-1
Industry Dummies
Constant
Robust std. errors
Number of firms for clustering errors
Number of observations
17
1.04***
0.09
0.40***
0.03
0.10***
0.01
0.33***
0.11
0.04
0.03
Incl.
-0.35
0.29
Yes
6,143
49,991
Table IA.IX
Number of Deals Announced in a Year Following IPO and Misvaluation
In this table, we re-estimate the models in Table IV including the firm-specific valuation error. IPOs are identified using the SDC Global Issues Database. The IPO sample includes
all IPOs from 1975 to 2008 excluding reverse LBOs, spinoffs, rights and unit offerings, ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP
before their IPO announcement date. Acquisition deals of the IPO firms include all acquisitions in SDC’s M&A database from 1981 to 2012. We estimate negative binomial
models (models (1), (3), (4), and (6) to (8)), and OLS models (models (2) and (5)) where the dependent variable is the total number of acquisitions made by firm i in year t. Age
refers to the number of years since the IPO year. New Firm Rate two-digit SIC, t-1 is calculated as ((the number of IPOs in year t-1/firms alive as of beginning of year t-1).
Delisting Rate at the two-digit SIC, t-1 is calculated as (the number of firms delisted in year t-1/firms alive as of beginning of year t-1). ((BAA-AAA)) Spreadt-1 is the difference
between the Moody’s BAA and the AAA rates in year t-1. Corporate bonds above BBB by S&P correspond to High Investment Grade Bondt-1. The book values of the acquirer’s
accounting variables are measured at the end of fiscal year t-1, which is the year-end immediately preceding announcement year t. Stock Return t-1 is calculated as (Closing Stock
Pricet-1+Dividendst-1-Closing Stock Pricet-2)/(Closing Stock Pricet-2). We use the first-day closing stock price or bid-ask average (from CRSP) as the closing stock price at t-2 for
t=1. Debt t-1 (sum of the current and long term liabilities), Capital Expenditure t-1, Operating Cash-Flow t-1 (operating income before depreciation, interest, and related expenses) ,
and Cash & Short-Term Investments t-1 are divided by the book value of fiscal year-end Total Assets t-1. Industry median at the four-digit SIC level is further subtracted from Cash
& Short Term Investments t-1/Total Assetst-1 ratio following Harford, Mansi, and Maxwell (2008). (2008). Merger Wave t equals one if the deal is in the period from 1995 to 2000.
Delisting Rate t-1 at the two-digit SIC, t-1 is calculated as (the number of firms delisted in year t-1/firms alive as of beginning of year t-1).Tobin’s Q, TQ t-1, is calculated as
((common shares outstanding*fiscal year-end closing price) + Debt t-1)/Total Assets t-1). Firm-Specific Misvaluationt-1 is calculated as mi,t-1-v(i,t-1;αi,t-1) as described in Table 5 of
Rhodes–Kropf, Robinson, and Vismanathan, (RRV) (2005). We calculated the fundamental value of firm i in year t-1, v(i,t-1;αi,t-1), based on the regression coefficients of the
Model 3 in Table 4 of RRV using the logs of market and book values of equity, an indicator for negative net income, absolute value of net income, and market value of leverage.
The book values of the acquirer’s accounting variables are measured at the end of the fiscal year t-1, which is the year end immediately preceding the announcement year t. All
firm-level continuous lagged variables are demeaned and Stock Return t-1 is further standardized at the firm level. The dependent variable is also demeaned at the firm level for
models (2) and (5) following Douglas Miller’s suggestion for implementing his STATA code CGMREG. Event year zero corresponds to the year the IPO drops out of the
regressions when lagged accounting variables are included. We used the data for the fiscal year-end of the IPO year to calculate lagged values for the first event year following the
IPO (event year=1). Standard errors are presented under the coefficients. *, **, *** denote statistical significance at the 10%, 5%, and 1% level, respectively.
Age
Age2
(1)
-0.04***
0.01
0.002***
0.0004
(2)
-0.03***
0.005
0.001***
0.0002
Age 4-9 Years
Age > 9 Years
New Firm Rate2-digit SIC,t-1
0.02
0.03
0.06***
0.02
0.17***
0.03
0.00
0.01
All
(3)
-0.32***
0.03
-0.39***
0.06
0.02
0.03
New Firm Rate2-digit SIC,t-1*Age 4-9 Years
New Firm Rate2-digit SIC,t-1*Age >9 Years
Delisting Rate via Acquisitions2-digit SIC,t-1
0.17***
0.03
Delisting Rate via Acquisitions2-digit SIC,t-1*Age 4-9 Years
Delisting Rate via Acquisitions2-digit SIC,t-1*Age >9 Years
18
(4)
-0.16***
0.05
-0.51***
0.07
-0.02
0.03
0.06
0.04
0.13*
0.07
0.14***
0.03
0.02
0.03
0.04
(5)
-0.11***
0.02
-0.15***
0.03
0.05*
0.03
0.00
0.03
0.05
0.04
0.01
0.02
-0.01
0.02
-0.01
Young
(6)
Middle
(7)
Mature
(8)
0.01
0.03
0.04
0.04
0.14**
0.06
0.13***
0.03
0.16***
0.03
0.18***
0.04
[BAA-AAA] Spreadt-1
High Investment-Grade Bondt-1
-0.45***
0.05
1.58***
0.16
-0.44***
0.05
1.57***
0.16
0.14*
0.07
High Investment-Grade Bondt-1*Age 4-9 Years
High Investment-Grade Bondt-1*Age >9 Years
Low Investment-Grade Bondt-1
0.95***
0.06
-0.04
0.04
0.94***
0.06
Low Investment-Grade Bondt-1*Age 4-9 Years
Low Investment-Grade Bondt-1*Age >9 Years
Returnt-1
0.06***
0.01
0.02**
0.01
0.06***
0.02
-1.27***
0.17
-0.60***
0.09
-1.24***
0.16
-0.37
0.24
-0.28**
0.13
-0.42*
0.24
Returnt-1*Age 4-9 Years
Returnt-1*Age >9 Years
[Debt/Total Assets]i,t-1
[Debt/Total Assets]i,t-1*Age 4-9 Years
[Debt/Total Assets]i,t-1*Age >9 Years
[Capital Exp./Total Assets] i,t-1
[Capital Exp./Total Assets] i,t-1*Age 4-9 Years
[Capital Exp./Total Assets] i,t-1*Age >9 Years
[Operating Cash Flow/Total Assets]t-1
0.96***
0.07
0.15***
0.05
0.96***
0.07
[Operating Cash Flow/Total Assets] i,t-1*Age 4-9 Years
[Operating Cash Flow/Total Assets] i,t-1*Age >9 Years
Merger Wavet
0.40***
0.04
0.40***
0.04
Merger Wavet*Age 4-9 Years
19
0.05
-0.47***
0.06
1.08***
0.22
0.32
0.25
0.47*
0.27
0.88***
0.09
0.07
0.1
-0.04
0.14
0.12***
0.02
-0.09***
0.03
-0.05
0.04
-0.88***
0.24
-0.58*
0.33
-0.41
0.4
-1.56***
0.38
2.22***
0.58
1.64**
0.73
1.15***
0.11
0.24
0.17
-1.12***
0.21
0.59***
0.05
-0.29***
0.07
0.02
0.02
0.20
-0.06
0.29
0.19
0.24
0.17*
0.09
-0.27**
0.11
-0.29***
0.10
0.07***
0.02
-0.04
0.02
-0.09***
0.03
-0.77***
0.16
0.14
0.19
0.37**
0.14
-0.20
0.17
0.03
0.16
-0.51**
0.21
0.15**
0.07
0.06
0.07
-0.10
0.09
-0.84***
0.11
1.05***
0.22
-0.42***
0.13
1.41***
0.33
-0.21***
0.07
1.55***
0.18
0.87***
0.09
0.95***
0.08
0.84***
0.11
0.12***
0.02
0.02
0.02
0.06**
0.03
-0.88***
0.24
-1.51***
0.38
-1.46***
0.25
-1.22***
0.30
0.67*
0.37
0.15
0.60
1.12***
0.11
1.41***
0.13
0.06
0.18
0.43***
0.06
0.32***
0.08
0.35***
0.07
Merger Wavet*Age >9 Years
TQi,t-1
0.07***
0.01
0.07***
0.02
0.07***
0.01
0.27**
0.12**
0.28***
0.11
0.05
0.11
TQi,t-1*Age 4-9 Years
TQi,t-1*Age >9 Years
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash & Short Term
Invest./Total Assets]4-Digit SIC Ind. Median,t-1
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash & Short -Term
Invest./Total Assets]4-Digit SIC Ind. Median,t-1*Age 4-9 Years
0.04
0.04
0.03
0.03
0.04
0.03
0.10**
0.04
0.04
0.03
0.10**
0.04
Logged Total Assetsi,t-1*Age 4-9 Years
Logged Total Assetsi,t-1*Age >9 Years
Firm-Specific Misvaluationi,t-1
Firm-Specific Misvaluationi,t-1*Age 4-9 Years
Firm-Specific Misvaluationi,t-1*Age >9 Years
Constant
Robust std. errors
Number of time periods for clustering errors
Number of firms for clustering errors
Number of observations
0.08***
0.02
-0.04*
0.02
-0.01
0.03
0.07
0.14
1.24***
0.08
0.19**
0.22
0.59**
[Cash & Short-Term Invest./Total Assets]i,t-1-[Cash & Short -Term
Invest./Total Assets]4-Digit SIC Ind. Median,t-1*Age >9 Years
Logged Total Assetsi,t-1
-0.30***
0.09
0.09***
0.01
-0.03
0.03
-0.03
0.03
-0.29**
-0.54***
0.06
Yes
6,105
48,013
-0.47***
0.09
No
32
6,105
48,013
20
-0.47***
0.06
Yes
6,105
48,013
0.27
-0.30***
0.03
0.31***
0.05
0.80***
0.06
0.00
0.05
0.20***
0.06
0.06
0.12
-0.49***
0.06
Yes
6,105
48,013
0.09***
0.01
0.06***
0.02
0.08***
0.03
0.95***
0.31
0.18
0.23
0.01
0.05
0.51***
0.05
0.00
0.05
0.20***
0.05
0.03
0.10
0.05
0.10
Yes
-0.59***
0.13
Yes
-0.31**
0.14
0.09
-0.05
0.10
-0.01
0.05
-0.01
0.03
0.12*
0.07
0.00
0.04
0.07
0.05
0.03
0.05
-0.48***
0.11
No
32
6,105
48,013
-0.30***
0.03
5,749
14,378
4,674
18,637
-1.13***
0.09
Yes
2,312
14,998
Table IA.X
Probability of Announcing no Deal, a Related Deal Based on Primary Two-Digit SIC code or an Unrelated Deal in a Year Following IPO
In this table we re-estimate Table 5 using a broader definition of diversification. IPOs are identified using the SDC Global Issues Database. The IPO sample includes all IPOs from
1975 to 2008 excluding reverse LBOs, spinoffs, rights and unit offerings, ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP before their
IPO announcement date. Acquisition deals of the IPO firms include all acquisitions in SDC’s M&A database from 1981 to 2012. In the multinomial logit regression, the dependent
variable takes the value of 0 if the firm announced no acquisitions in year t, 1 if it had a related acquisition, and 2 if it had an unrelated acquisition. Base outcome is when the firm
has no deal in year t. Related acquisitions have the primary two-digit SIC codes in common between the acquirer and the target. If a firm has more than one deal in a given year,
we collapse it into one deal and classify it as related if the number of related deals is higher than unrelated ones and vice versa. We exclude firm-years in which there are equal
numbers of related and unrelated deals from the regressions. Age refers to the number of years since the IPO year. New Firm Rate two-digit SIC, t-1 is calculated as ((the number
of IPOs in year t-1/firms alive as of beginning of year t-1). Delisting Rate at the two-digit SICt-1 is calculated as (the number of firms delisted in year t-1/firms alive as of
beginning of year t-1). ((BAA-AAA)) Spreadt-1 is the difference between the Moody’s BAA and the AAA rates in year t-1. Corporate bonds above BBB by S&P correspond to High
Investment Grade Bondt-1. The book values of the acquirer’s accounting variables are measured at the end of fiscal year t-1, which is the year-end immediately preceding
announcement year t. Stock Return t-1 is calculated as (Closing Stock Pricet-1+Dividendst-1-Closing Stock Pricet-2)/(Closing Stock Pricet-2). We use the first-day closing stock price
or bid-ask average (from CRSP) as the closing stock price at t-2 for t=1. Debt t-1 (sum of the current and long term liabilities), Capital Expenditure t-1, Operating Cash-Flow t-1
(operating income before depreciation, interest, and related expenses) , and Cash & Short-Term Investments t-1 are divided by the book value of fiscal year-end Total Assets t-1.
Industry median at the four-digit SIC level is further subtracted from Cash & Short Term Investments t-1/Total Assetst-1 ratio following Harford, Mansi, and Maxwell (2008).
(2008). Merger Wave t equals one if the deal is in the period from 1995 to 2000. Delisting Rate t-1 at the two-digit SIC, t-1 is calculated as (the number of firms delisted in year t1/firms alive as of beginning of year t-1).Tobin’s Q, TQ t-1, is calculated as ((common shares outstanding*fiscal year-end closing price)+ Debt t-1)/Total Assets t-1). The book values
of the acquirer’s accounting variables are measured at the end of the fiscal year t-1, which is the year end immediately preceding the announcement year t. All firm-level
continuous lagged variables are demeaned and Stock Return t-1 is further standardized at the firm level. Event year zero corresponds to the year the IPO drops out of the regressions
when lagged accounting variables are included. We used the data for the fiscal year-end of the IPO year to calculate lagged values for the first event year following the IPO (event
year=1). Standard errors are presented under the coefficients. *, **, *** denote statistical significance at the 10%, 5%, and 1% level, respectively.
All
Young
Middle
Mature
(1)
(2)
(3)
(4)
(5)
(6)
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Age
Age2
-0.07*** -0.09***
0.01
0.01
0.002*** 0.002***
0.0004
0.001
Age 4-9 Years
Age > 9 Years
New Firm Rate2-digit SIC,t-1
-0.04*
0.02
0.09***
0.02
New Firm Rate2-digit SIC,t-1*Age 4-9
Years
-0.33*** -0.37*** -0.19*** -0.33***
0.03
0.04
0.05
0.06
-0.44*** -0.55*** -0.43*** -0.72***
0.05
0.06
0.07
0.09
-0.04*
0.09*** -0.05*
0.07**
0.02
0.02
0.03
0.03
0.00
0.03
0.04
0.06
New Firm Rate2-digit SIC,t-1*Age >9
Years
Delisting Rate via Acquisitions2-digit
SIC,t-1
0.00
0.03
0.10*** -0.05
0.03
0.04
0.10**
0.04
0.07
0.06
0.11*
0.06
0.05
0.00
0.26***
0.08***
0.26***
0.08***
0.06
0.07
0.30*** 0.11***
0.28*** 0.11***
0.26***
0.06*
0.23*** 0.08*
0.02
0.03
0.02
0.03
0.03
0.03
0.03
0.03
0.04
21
0.04
0.04
0.05
Delisting Rate via Acquisitions2-digit
SIC,t-1*Age 4-9 Years
Delisting Rate via Acquisitions2-digit
SIC,t-1*Age >9 Years
[BAA-AAA] Spreadt-1
High Investment-Grade Bondt-1
-0.40***
0.05
1.45***
0.17
-0.54***
0.07
1.32***
0.25
High Investment-Grade Bondt-1*Age 49 Years
1.11***
0.06
0.62***
0.08
1.10***
0.06
0.62***
0.08
Low Investment-Grade Bondt-1*Age 49 Years
0.04***
0.01
0.03
0.02
Returnt-1*Age 4-9 Years
Returnt-1*Age >9 Years
[Debt/Total Assets]i,t-1
-1.21***
0.12
-1.27***
0.15
[Debt/Total Assets]i,t-1*Age 4-9 Years
[Debt/Total Assets]i,t-1*Age >9 Years
[Capital Exp./Total Assets] i,t-1
0.23
0.27
0.21
0.32
[Capital Exp./Total Assets] i,t-1*Age 4-9
Years
0.05
-0.03
0.36
0.22
0.45
0.56
0.43
1.13***
0.09
0.02
0.43
0.39***
0.13
0.26*
0.14
0.05*
0.03
0.02
0.04
-0.03
0.04
-1.19*** -1.25*** -0.93***
0.12
0.15
0.21
-0.45
0.28
-0.19
0.31
0.17
0.16
-0.94**
0.27
0.33
0.43
2.09***
0.04***
0.01
0.03
0.02
-1.02***
0.11
1.10***
0.36
-0.88*** -0.38***
0.14
0.1
0.85**
1.34***
0.39
0.2
-0.63***
0.14
1.13***
0.35
-0.09
0.07
1.33***
0.24
-0.19*
0.11
1.41***
0.29
1.11*** 0.37***
0.09
0.13
1.16***
0.08
0.65***
0.10
0.90*** 0.70***
0.11
0.13
0.04
0.03
0.07***
0.02
0.04
0.03
0.01
0.03
0.15
0.32*
0.18
0.05
0.04
-0.02
0.05
-0.05
0.05
-0.84***
0.25
-0.71**
0.36
-0.62
0.39
-0.57
0.49
2.25***
0.05
0.04
-0.92*** -0.84*** -1.38***
0.21
0.25
0.20
-0.87**
0.44
-0.51
0.49
-1.55***
0.27
0.00
0.03
-1.13*** -1.46***
0.23
0.30
1.15**
0.47
1.69***
0.56
0.82
0.72
-0.72
0.84
1.37***
1.10***
0.60*** 0.16
0.66
0.76
1.72** -0.20
[Capital Exp./Total Assets] i,t-1*Age >9
Years
[Operating Cash Flow/Total Assets]t-1
0.04
-0.06
0.11
-0.23*
Low Investment-Grade Bondt-1*Age
>9 Years
Returnt-1
-0.05
0.05
0.06
-0.39*** -0.54*** -0.44*** -0.57***
0.05
0.07
0.05
0.08
1.44*** 1.31*** 1.12*** 0.86**
0.17
0.24
0.35
0.39
0.21
0.27
High Investment-Grade Bondt-1*Age
>9 Years
Low Investment-Grade Bondt-1
-0.04
1.15***
1.08***
1.17***
1.11***
0.86
0.98
1.36*** 1.61***
22
1.38*** 1.62***
0.09
0.13
0.09
0.13
[Operating Cash Flow/Total Assets]i,t1*Age 4-9 Years
0.14
0.00
0.31***
0.04
0.30***
0.05
0.31***
0.04
0.09***
0.01
0.07***
0.01
0.09***
0.01
[Cash & Short-Term Invest./Total
0.59***
Assets]i,t-1-[Cash & Short Term
Invest./Total Assets]4-Digit SIC Ind. Median,t-1
0.11
[Cash & Short-Term Invest./Total
Assets]i,t-1-[Cash & Short -Term
Invest./Total Assets]4-Digit SIC Ind. Median,t1*Age 4-9 Years
0.94***
0.59***
0.24
0.51***
0.06
-0.21***
0.07
-0.46***
0.09
0.07*** 0.13***
0.01
0.01
-0.05**
0.02
-0.10***
0.03
0.95*** 0.25
0.14
0.11
0.14
Merger Wavet*Age 4-9 Years
Merger Wavet*Age >9 Years
TQi,t-1
TQi,t-1*Age 4-9 Years
TQi,t-1*Age >9 Years
0.31***
0.05
0.00
0.03
0.01
0.03
Logged Total Assetsi,t-1*Age 4-9 Years
Logged Total Assetsi,t-1*Age >9 Years
Constant
Robust std. errors
Number of firms (panels) for clustered
errors
Number of observations
-1.03***
0.06
Yes
-1.43***
0.09
0.30
-0.35***
0.04
0.31***
0.06
0.75***
0.06
-1.12*** -1.55*** -1.35***
0.05
0.08
0.05
Yes
Yes
-0.01
0.03
0.34
0.37***
0.07
-0.14
0.09
0.02
0.12
0.09***
0.02
-0.05
0.03
-0.01
0.03
0.65***
0.18
0.22
1.04*** 0.54
0.27
-0.19
[Cash & Short-Term Invest./Total
Assets]i,t-1-[Cash & Short -Term
Invest./Total Assets]4-Digit SIC Ind. Median,t1*Age >9 Years
Logged Total Assetsi,t-1
0.14
0.21
0.16
0.19
0.19
0.27
0.26*** 0.23***
0.07
0.08
0.32***
0.06
0.21**
0.08
0.14*
0.08
0.50***
0.10
0.13*** 0.09***
0.01
0.02
0.08***
0.02
0.04**
0.02
0.04
0.02
0.09***
0.03
0.23
0.64***
1.29***
1.19***
0.06
0.95***
0.18
0.22
0.19
0.25
0.23
0.31
-0.36*** -0.19*** -0.03
0.04
0.04
0.05
-0.02
0.05
-0.62*** -1.22*** -1.48***
0.11
0.13
0.1
Yes
Yes
-1.83***
0.13
0.21
0.29
-0.76*** -1.46***
[Operating Cash Flow/Total Assets]i,t1*Age >9 Years
Merger Wavet
0.21
-0.51*
-0.01
0.03
0.34
0.30
0.38
-0.18***
0.04
0.17***
0.07
0.40***
0.08
-1.82***
0.07
0.40*** 0.21***
0.05
0.07
-2.05*** -2.57***
0.09
0.12
Yes
6,143
6,143
6,143
5,791
4,810
2,369
49,342
49,342
49,342
14,437
19,380
15,525
23
Table IA.XI
Probability of Announcing no Deal, a Related Deal Based on All Two-Digit SIC Codes or an Unrelated Deal in a Year Following IPO
In this table, we re-estimate the models in Table V with the inclusion of firm-specific valuation error. IPOs are identified using the SDC Global Issues Database. The IPO sample
includes all IPOs from 1975 to 2008 excluding reverse LBOs, spinoffs, rights and unit offerings, ADRs, closed-end funds, REITs, and IPO firms with stock price data available
from CRSP before their IPO announcement date. Acquisition deals of the IPO firms include all acquisitions in SDC’s M&A database from 1981 to 2012. In the multinomial logit
regression, the dependent variable takes the value of 0 if the firm announced no acquisitions in year t, 1 if it had a related acquisition, and 2 if it had an unrelated acquisition. Base
outcome is when the firm has no deal in year t. Related acquisitions have at least one two-digit SIC code in common between the acquirer and the target. If a firm has more than
one deal in a given year, we collapse it into one deal and classify it as related if the number of related deals is higher than unrelated ones and vice versa. We exclude firm-years in
which there are equal numbers of related and unrelated deals from the regressions. Age refers to the number of years since the IPO year. New Firm Rate two-digit SIC, t-1 is
calculated as ((the number of IPOs in year t-1/firms alive as of beginning of year t-1). Delisting Rate at the two-digit SICt-1 is calculated as (the number of firms delisted in year t1/firms alive as of beginning of year t-1). ((BAA-AAA)) Spreadt-1 is the difference between the Moody’s BAA and the AAA rates in year t-1. Corporate bonds above BBB by S&P
correspond to High Investment Grade Bondt-1. The book values of the acquirer’s accounting variables are measured at the end of fiscal year t-1, which is the year-end immediately
preceding announcement year t. Stock Return t-1 is calculated as (Closing Stock Pricet-1+Dividendst-1-Closing Stock Pricet-2)/(Closing Stock Pricet-2). We use the first-day closing
stock price or bid-ask average (from CRSP) as the closing stock price at t-2 for t=1. Debt t-1 (sum of the current and long term liabilities), Capital Expenditure t-1, Operating CashFlow t-1 (operating income before depreciation, interest, and related expenses) , and Cash & Short-Term Investments t-1 are divided by the book value of fiscal year-end Total
Assets t-1. Industry median at the four-digit SIC level is further subtracted from Cash & Short Term Investments t-1/Total Assetst-1 ratio following Harford, Mansi, and Maxwell
(2008). (2008). Merger Wave t equals one if the deal is in the period from 1995 to 2000. Delisting Rate t-1 at the two-digit SIC, t-1 is calculated as (the number of firms delisted in
year t-1/firms alive as of beginning of year t-1).Tobin’s Q, TQ t-1, is calculated as ((common shares outstanding*fiscal year-end closing price)+ Debt t-1)/Total Assets t-1). FirmSpecific Misvaluationt-1 is calculated as mi,t-1-v(i,t-1;αi,t-1) as described in Table 5 of Rhodes–Kropf, Robinson, and Viswanathan, (RRV) (2005). We calculated the fundamental
value of firm i in year t-1, v(i,t-1;αi,t-1), based on the regression coefficients of the Model 3 in Table 4 of RRV using the logs of market and book values of equity, an indicator for
negative net income, absolute value of net income, and market value of leverage. The book values of the acquirer’s accounting variables are measured at the end of the fiscal year
t-1, which is the year end immediately preceding the announcement year t. All firm-level continuous lagged variables are demeaned and Stock Return t-1 is further standardized at
the firm level. Event year zero corresponds to the year the IPO drops out of the regressions when lagged accounting variables are included. We used the data for the fiscal year-end
of the IPO year to calculate lagged values for the first event year following the IPO (event year=1). Standard errors are presented under the coefficients. *, **, *** denote
statistical significance at the 10%, 5%, and 1% level, respectively.
All
Young
Middle
Mature
(1)
(2)
(3)
(4)
(5)
(6)
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Age
Age2
-0.07***
0.01
0.002***
0.0003
-0.08***
0.01
0.002***
0.0006
Age 4-9 Years
Age > 9 Years
New Firm Rate2-digit SIC,t-1
New Firm Rate2-digit SIC,t-1*Age 4-9
Years
0.02
0.02
0.04
0.03
-0.34***
0.03
-0.44***
0.05
0.02
0.02
-0.35***
0.06
-0.57***
0.08
0.04
0.03
-0.23***
0.05
-0.49***
0.07
0.03
0.03
-0.03
24
-0.31***
0.08
-0.74***
0.11
0.01
0.04
0.06
0.08*** 0.04
0.03
0.05
0.01
0.03
0.07
0.06
0.08
0.05
0.08
0.08
New Firm Rate2-digit SIC,t-1*Age >9
Years
Delisting Rate via Acquisitions2digit SIC,t-1
0.26***
0.02
-0.03
0.03
0.26*** -0.03
0.02
0.03
Delisting Rate via Acquisitions2digit SIC,t-1*Age 4-9 Years
High Investment-Grade Bondt-1
-0.45***
0.05
1.42***
0.16
-0.30***
0.09
1.46***
0.29
-0.44***
0.05
1.42***
0.16
-0.30***
0.09
1.43***
0.29
High Investment-Grade Bondt1*Age 4-9 Years
High Investment-Grade Bondt1*Age >9 Years
Low Investment-Grade Bondt-1
1.06***
0.06
0.62***
0.10
1.05*** 0.61***
0.06
0.10
Low Investment-Grade Bondt1*Age 4-9 Years
Low Investment-Grade Bondt1*Age >9 Years
Returnt-1
0.03**
0.01
0.03
0.02
0.04*** 0.03
0.01
0.02
Returnt-1*Age 4-9 Years
Returnt-1*Age >9 Years
[Debt/Total Assets]i,t-1
[Debt/Total Assets]i,t-1*Age 4-9
Years
0.07
0.00
0.06
0.05
0.10
0.31*** -0.07
0.03
0.06
-0.06
0.03
Delisting Rate via Acquisitions2digit SIC,t-1*Age >9 Years
[BAA-AAA] Spreadt-1
0.04
-1.37***
0.14
-1.13***
0.24
-1.33*** -1.09***
0.14
0.24
-0.07
0.05
-0.50***
0.05
1.13***
0.34
0.11
0.08
-0.34***
0.10
0.92**
0.46
0.25
0.43
0.20
0.40
1.06***
0.09
0.73
0.47
0.25
0.18
0.03
0.11
0.34
0.21
0.59**
0.24
0.02
0.05
0.03
0.06
0.01
0.07
-0.88**
0.37
-0.99*** -0.45
0.31
0.59
25
0.25*** -0.05
0.03
0.05
0.23*** 0.03
0.04
0.06
0.02
0.07
0.18
0.35
-0.20
0.14
0.07**
0.03
-0.03
0.03
-0.05
0.04
-0.81***
0.22
0.30*** -0.07
0.03
0.06
-1.02***
0.10
1.11***
0.34
-0.59***
0.17
0.91**
0.46
-0.45***
0.09
1.31***
0.19
-0.32*
0.17
1.17***
0.43
-0.14**
0.07
1.32***
0.22
-0.10
0.16
1.65***
0.31
1.04*** 0.24
0.09
0.18
1.09*** 0.59***
0.08
0.14
0.86*** 0.84***
0.10
0.15
0.06**
0.03
0.04*
0.02
0.01
0.02
0.02
0.05
-0.81*** -0.88**
0.22
0.37
0.05
0.04
-1.80*** -1.32***
0.24
0.46
0.02
0.04
-1.29*** -1.05**
0.26
0.45
[Debt/Total Assets]i,t-1*Age >9
Years
[Capital Exp./Total Assets] i,t-1
0.03
0.26
0.40
0.45
-0.02
0.26
0.37
0.45
[Capital Exp./Total Assets] i,t-1*Age
4-9 Years
1.49*
0.79
1.08***
0.09
0.84***
0.19
1.10*** 0.87***
0.09
0.19
[Operating Cash Flow/Total
Assets]i,t-1*Age 4-9 Years
[Operating Cash Flow/Total
Assets]i,t-1*Age >9 Years
Merger Wavet
0.31***
0.03
0.34***
0.06
0.32*** 0.34***
0.03
0.06
0.08***
0.01
0.07***
0.02
0.08*** 0.07***
0.01
0.02
0.68***
0.1
0.65***
0.19
0.68*** 0.66***
0.10
0.19
Merger Wavet*Age 4-9 Years
Merger Wavet*Age >9 Years
TQi,t-1
-0.22
0.58
0.06
0.65
-1.01**
0.40
0.12
0.65
1.08**
0.45
1.58**
0.78
0.47
0.67
-1.51
1.18
-0.04
0.41
2.16*** 1.52
0.61
1.02
[Capital Exp./Total Assets] i,t-1*Age
>9 Years
[Operating Cash Flow/Total
Assets]t-1
-0.56
0.35
-1.08***
0.40
TQi,t-1*Age 4-9 Years
TQi,t-1*Age >9 Years
-1.61
1.36
1.36*** 1.45***
0.14
0.29
-0.01
0.21
-0.75*
0.40
-0.95***
0.24
0.47***
0.05
-0.16**
0.07
-0.31***
0.09
0.13***
0.02
-0.10***
0.02
-0.11***
0.03
-1.51***
0.51
0.38***
0.09
-0.09
0.12
0.06
0.15
0.10***
0.03
-0.04
0.05
-0.02
0.06
1.36*** 1.46***
0.14
0.29
1.35*** 0.70***
0.15
0.27
0.42**
0.19
0.24*** 0.26**
0.06
0.11
0.32*** 0.30***
0.06
0.11
0.25*** 0.50***
0.07
0.13
0.13*** 0.10***
0.02
0.03
0.04**
0.02
0.04
0.02
0.09**
0.04
0.29*
0.17
1.31*** 0.90***
0.18
0.34
0.24
0.22
0.60
0.39
0.06
0.04
[Cash & Short-Term Invest./Total
Assets]i,t-1-[Cash & Short Term
Invest./Total Assets]4-Digit SIC Ind.
Median,t-1
[Cash & Short-Term Invest./Total
Assets]i,t-1-[Cash & Short -Term
Invest./Total Assets]4-Digit SIC Ind.
Median,t-1*Age 4-9 Years
[Cash & Short-Term Invest./Total
0.31*
0.17
0.39
0.29
1.01*** 0.50
0.25
0.44
-0.06
0.22
26
0.39
0.29
Assets]i,t-1-[Cash & Short -Term
Invest./Total Assets]4-Digit SIC Ind.
Median,t-1*Age >9 Years
Logged Total Assetsi,t-1
0.01
0.03
-0.01
0.04
0.00
0.03
-0.03
0.04
Logged Total Assetsi,t-1*Age 4-9
Years
0.10***
0.03
-0.04
0.05
0.09*** -0.05
0.03
0.05
Firm-Specific Misvaluationi,t1*Age 4-9 Years
Robust std. errors
Number of firms (panels) for
clustered errors
Number of observations
-0.01
0.05
-0.03
0.07
0.40*** 0.15*
0.05
0.08
0.72***
0.06
-0.04
0.05
0.33***
0.10
-0.07
0.09
-0.04
0.05
-0.07
0.09
0.20*** -0.09
0.04
0.09
0.06
0.05
-0.01
0.10
0.24*** -0.02
0.06
0.12
Firm-Specific Misvaluationi,t1*Age >9 Years
Constant
-0.32*** -0.18***
0.03
0.05
0.30*** 0.15*
0.05
0.09
Logged Total Assetsi,t-1*Age >9
Years
Firm-Specific Misvaluationi,t-1
0.28
0.48
-0.32*** -0.18***
0.03
0.05
-0.70***
0.06
Yes
6,097
47,423
-2.22***
0.11
-0.80*** -2.35***
0.05
0.10
Yes
6,097
47,423
0.14*
0.08
-1.02***
0.05
Yes
6,097
47,423
27
0.08
0.13
-2.62***
0.10
-0.31*** -2.07***
0.10
0.17
Yes
5,713
14,036
-1.13*** -2.66***
0.09
0.17
Yes
4,665
18,454
-1.72*** -3.25***
0.08
0.16
Yes
2,310
14,933
Table IA.XII
Probability of Announcing no Deal, a Related Deal Based on All Two-Digit SIC Codes or an Unrelated Deal in a Year Following IPO
In this table, we re-estimate the models in Table V and exclude firms in financial services, utilities, as well as IPOs identified as penny stocks, and rollups. IPOs with offer prices
below $5 are penny stocks. Rollups are identified using Jay Ritter’s data set available online at http://bear.warrington.ufl.edu/ritter/Rollup%20Information.htm and described in
Ritter (2015). IPOs are identified using the SDC Global Issues Database. The IPO sample includes all IPOs from 1975 to 2008 excluding reverse LBOs, spinoffs, rights and unit
offerings, ADRs, closed-end funds, REITs, and IPO firms with stock price data available from CRSP before their IPO announcement date. Acquisition deals of the IPO firms
include all acquisitions in SDC’s M&A database from 1981 to 2012. In the multinomial logit regression, the dependent variable takes the value of 0 if the firm announced no
acquisitions in year t, 1 if it had a related acquisition, and 2 if it had an unrelated acquisition. Base outcome is when the firm has no deal in year t. Related acquisitions have at
least one two-digit SIC code in common between the acquirer and the target. If a firm has more than one deal in a given year, we collapse it into one deal and classify it as related
if the number of related deals is higher than unrelated ones and vice versa. We exclude firm-years in which there are equal numbers of related and unrelated deals from the
regressions. Age refers to the number of years since the IPO year. New Firm Rate two-digit SIC, t-1 is calculated as ((the number of IPOs in year t-1/firms alive as of beginning of
year t-1). Delisting Rate at the two-digit SICt-1 is calculated as (the number of firms delisted in year t-1/firms alive as of beginning of year t-1). ((BAA-AAA)) Spreadt-1 is the
difference between the Moody’s BAA and the AAA rates in year t-1. Corporate bonds above BBB by S&P correspond to High Investment Grade Bond t-1. The book values of the
acquirer’s accounting variables are measured at the end of fiscal year t-1, which is the year-end immediately preceding announcement year t. Stock Return t-1 is calculated as
(Closing Stock Pricet-1+Dividendst-1-Closing Stock Pricet-2)/(Closing Stock Pricet-2). We use the first-day closing stock price or bid-ask average (from CRSP) as the closing stock
price at t-2 for t=1. Debt t-1 (sum of the current and long term liabilities), Capital Expenditure t-1, Operating Cash-Flow t-1 (operating income before depreciation, interest, and
related expenses) , and Cash & Short-Term Investments t-1 are divided by the book value of fiscal year-end Total Assets t-1. Industry median at the four-digit SIC level is further
subtracted from Cash & Short Term Investments t-1/Total Assetst-1 ratio following Harford, Mansi, and Maxwell (2008). (2008). Merger Wave t equals one if the deal is in the period
from 1995 to 2000. Delisting Rate t-1 at the two-digit SIC, t-1 is calculated as (the number of firms delisted in year t-1/firms alive as of beginning of year t-1).Tobin’s Q, TQ t-1, is
calculated as ((common shares outstanding*fiscal year-end closing price)+ Debt t-1)/Total Assets t-1). The book values of the acquirer’s accounting variables are measured at the end
of the fiscal year t-1, which is the year end immediately preceding the announcement year t. All firm-level continuous lagged variables are demeaned and Stock Return t-1 is further
standardized at the firm level. Event year zero corresponds to the year the IPO drops out of the regressions when lagged accounting variables are included. We used the data for the
fiscal year-end of the IPO year to calculate lagged values for the first event year following the IPO (event year=1). Standard errors are presented under the coefficients. *, **, ***
denote statistical significance at the 10%, 5%, and 1% level, respectively.
All
Young
Middle
Mature
(1)
(2)
(3)
(4)
(5)
(6)
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Rel.
Unrel.
Age
Age2
-0.07***
0.01
0.002***
0.0004
-0.09***
0.01
0.003***
0.0006
Age 4-9 Years
Age > 9 Years
New Firm Rate2-digit SIC,t-1
0.02
0.02
0.07**
0.03
-0.33***
0.03
-0.39***
0.05
0.02
0.02
-0.34*** -0.19***
0.06
0.05
-0.53*** -0.38***
0.08
0.07
0.07*
0.02
0.03
0.03
New Firm Rate2-digit SIC,t1*Age 4-9 Years
-0.03
0.05
New Firm Rate2-digit SIC,t1*Age >9 Years
Delisting Rate via
0.31***
-0.01
0.31***
-0.01
-0.30***
0.08
-0.66***
0.12
0.08*
0.05
0.08**
0.03
0.12**
0.05
-0.01
0.04
0.05
0.06
0.14**
0.06
0.12
0.10
0.26***
0.04
-0.03
0.08
0.05
0.06
0.40***
28
0.00
0.11
-0.05
0.39***
-0.06
0.28*** -0.02
Acquisitions2-digit SIC,t-1
0.02
0.04
0.02
0.04
Delisting Rate via
Acquisitions2-digit SIC,t-1*Age
4-9 Years
High Investment-Grade
Bondt-1
-0.45***
0.05
-0.40***
0.11
-0.44***
0.05
1.67***
0.20
1.34***
0.28
1.68***
0.21
-0.13***
0.05
-0.39*** -0.47***
0.11
0.05
1.35***
0.28
High Investment-Grade
Bondt-1*Age 4-9 Years
High Investment-Grade
Bondt-1*Age >9 Years
Low Investment-Grade
Bondt-1
1.07***
0.07
0.66***
0.11
1.07***
0.07
0.66***
0.11
Low Investment-Grade
Bondt-1*Age 4-9 Years
Low Investment-Grade
Bondt-1*Age >9 Years
Returnt-1
0.04***
0.01
0.03
0.03
0.04***
0.01
Returnt-1*Age 4-9 Years
Returnt-1*Age >9 Years
[Debt/Total Assets]i,t-1
-1.26***
0.12
-1.33***
0.21
-1.25***
0.12
[Debt/Total Assets] i,t-1*Age
>9 Years
0.20
0.23
0.12
0.19
0.10
0.08
-0.44***
0.11
0.34
1.14
0.39
0.67
0.36
1.27
0.38
0.68
1.16
1.17
0.99***
0.10
0.32
0.20
0.13
0.12
0.31
0.22
0.49*
0.26
0.05
0.05
-0.01
0.07
-0.04
0.07
-0.82**
0.37
-0.57**
0.28
-0.85
0.53
-0.42
0.31
-1.03**
-0.74
0.51
0.16
29
0.03
0.06
0.03
0.05
0.04
0.06
-0.06
0.07
-0.11
0.16
0.03
0.07
1.13*
0.65
-0.09
0.15
0.03
0.06**
0.03
0.03
-0.01
0.04
-0.04
0.04
-1.33*** -0.91***
0.21
0.21
[Debt/Total Assets] i,t-1*Age
4-9 Years
[Capital Exp./Total
0.06
-0.12***
0.04
Delisting Rate via
Acquisitions2-digit SIC,t-1*Age
>9 Years
[BAA-AAA] Spreadt-1
0.03
-1.10***
0.11
-0.85***
0.19
-0.43*** -0.34*
0.10
0.20
1.07*
0.64
0.31
1.13
1.52***
0.24
0.71
0.53
1.51***
0.25
1.51***
0.32
0.97***
0.11
0.30
0.20
1.12***
0.09
0.63***
0.15
0.89***
0.11
0.80***
0.16
0.06**
0.03
0.04
0.05
0.05**
0.02
0.04
0.04
0.01
0.02
0.00
0.05
-0.92***
0.21
-0.95**
-0.83**
0.37
0.24
-1.49*** -1.68***
0.20
0.38
1.44***
0.96
-1.33*** -1.57***
0.22
0.37
0.42
-1.79
Assets]i,t-1
0.27
0.50
0.27
0.50
[Capital Exp./Total
Assets]i,t-1*Age 4-9 Years
Capital Exp./Total Assets] i,t1*Age >9 Years
[Operating Cash Flow/Total
Assets]t-1
1.17***
0.09
0.99***
0.18
1.18***
0.09
2.46***
0.64
0.80
1.12
1.01***
0.18
0.32***
0.04
0.34***
0.07
0.32***
0.04
1.51***
0.14
-0.21***
0.07
Merger Wavet*Age >9
Years
0.10***
0.01
0.07***
0.02
0.10***
0.01
0.70***
0.11
0.65***
0.19
0.70***
0.11
TQi,t-1*Age 4-9 Years
TQi,t-1*Age >9 Years
0.72
0.47
0.85
0.67
1.23
1.56***
0.29
1.52***
0.15
1.56***
0.29
1.34***
0.15
0.88***
0.26
0.51***
0.18
0.22
0.35
0.24***
0.07
0.21*
0.11
0.32***
0.06
0.39***
0.12
0.19**
0.08
0.38***
0.14
0.13***
0.01
0.08***
0.03
0.08***
0.02
0.05*
0.03
0.05**
0.02
0.09**
0.04
0.29*
0.18
0.31
0.30
1.30***
0.18
0.94***
0.34
0.27
0.22
0.68*
0.39
-0.68*
0.39
-1.00***
0.23
0.34*** 0.51***
0.07
0.06
Merger Wavet*Age 4-9
Years
0.43
-1.99
1.44
-0.17
0.21
[Operating Cash
Flow/Total Assets] i,t-1*Age
>9 Years
TQi,t-1
0.72
1.40*
0.81
Operating Cash Flow/Total
Assets]i,t-1*Age 4-9 Years
Merger Wavet
0.42
-0.43***
0.09
0.07*** 0.13***
0.02
0.01
-0.05**
0.02
-0.09***
0.03
-1.35***
0.46
0.40***
0.10
-0.04
0.12
-0.10
0.16
0.08***
0.03
-0.03
0.04
0.00
0.05
[Cash & Short-Term
Invest./Total Assets] i,t-1[Cash & Short Term
Invest./Total Assets]4-Digit SIC
Ind. Median,t-1
[Cash & Short-Term
Invest./Total Assets] i,t-1[Cash & Short -Term
Invest./Total Assets]4-Digit SIC
Ind. Median,t-1*Age 4-9 Years
[Cash & Short-Term
0.66***
0.19
0.32*
0.17
0.32
0.30
0.98***
0.25
-0.05
30
0.62
0.45
0.37
Invest./Total Assets] i,t-1[Cash & Short -Term
Invest./Total Assets]4-Digit SIC
Ind. Median,t-1*Age >9 Years
Logged Total Assetsi,t-1
0.03
0.03
-0.01
0.04
0.03
0.03
Logged Total Assetsi,t1*Age 4-9 Years
Robust std. errors
Number of firms (panels)
for clustered errors
Number of observations
0.28
-0.31***
0.03
0.33***
0.05
Logged Total Assetsi,t1*Age >9 Years
Constant
-0.02
0.04
-0.76***
0.06
Yes
5,172
42,726
-2.18***
0.12
-0.85***
0.05
Yes
5,172
42,726
0.73***
0.06
-2.32*** -1.06***
0.11
0.05
Yes
5,172
42,726
0.49
-0.19***
0.05
-0.32***
0.03
-0.20***
0.05
-0.30***
0.11
Yes
-1.90***
0.19
-0.06
0.08
0.41***
0.05
0.22***
0.08
0.13
0.09
0.41***
0.1
-2.56***
0.11
4,955
12,422
31
0.02
0.05
-1.18*** -2.69***
0.10
0.20
Yes
-1.76*** -3.27***
0.08
0.17
Yes
4,110
16,878
2,005
13,426