No other coefficients are statistically significant at 95% confidence, except NUMINST, which is
statistically significant in a direction opposite to what negotiation theory would predict.
In view of the lack of statistical significance among controls, I now run a parsimonious
model that includes only a subset of the controls that were included in Table 3. Reducing the
number of controls is particularly useful in a small sample in order to maximize degrees of
freedom. Specifically, I eliminate the three variables under the heading of “Target Shareholder
Profile,” none of which were statistically significant in the Table 3 regressions. I run the
stripped-down model only using the final premium as the dependent variable, over the average
trading price for 60 days prior to deal announcement. Results are similar when I run the model
on the final premium over the average trading price 30 days prior to deal announcement. The
results from this analysis are reported in Tables 4A and 4B.
[insert Tables 4A and 4B here]
Model #1 in Tables 4A & 4B shows the baseline specification, that is, the same model as
reported in Table 3 but with the target shareholder profile variables omitted. The results from
this baseline model are consistent with the results reported in Table 3, including the magnitude
and statistical significant of the TENDER coefficient. The remaining models report results from
three alternative specifications.
Models #2 and #3 focus on the influence of deal size on the results reported thus far. Freeze-
outs overall are relatively small deals (e.g., median deal size of $17.0 million among post-
Siliconix freeze-outs, as reported in Table 1) and so while the negative coefficients for the tender
offer variables reported in Table 3 are generally large in magnitude, the differences in outcomes
between the two transactional forms may not be economically meaningful. Results reported thus
far control for deal size by including the LNVAL variable in all specifications. I now examine