110 Executive Stock Options, Corporate Cash Holdings and M&A Decisions Variable Definition CAR (-2, +2 ) the acquirer's cumulative abnormal return over a five-day event window (two days before and two days after the announcement date) Relative Size the natural logarithm of the ratio of M&A transaction value to total assets of the acquirer at the end of the fiscal year prior to the acquisition announcement. Private Target A dummy variable equals one if the target is a private firm defined by the SDC M&A database, and zero otherwise. Within-industry acquisition An indicator that equals to one if the acquirer and the target have the same three-digit SIC code, and zero otherwise. All Cash An indicator that equals to one if the M&A is fully paid with cash, and zero otherwise. Competed A dummy variable that equals to one if there is more than one bidder, and zero otherwise. Hostile A dummy variable that equals to one if M&A is identified as hostile by the SDC M&A database, and zero otherwise. IAROA Industry-adjusted profitability represents a firm’s annual return on assets (ROA) net of the industry median. The return on assets (ROA) is operating income before depreciation scaled by total assets. The industry medians are estimated based on a yearly basis using all firms with the same two-digit SIC codes in COMPUSTAT database. IAM/B Industry-adjusted market-to-book ratio represents a firm’s annual market-tobook ratio net of the industry median. The industry medians are estimated based on a yearly basis using all firms with the same two-digit SIC codes in COMPUSTAT database. Aveleverag the average leverage over the prior two years Avesalegrowth the average of sale growth over the prior two years Tenure the number of years that the current CEO has served in that capacity as reported in ExecuComp database. Taxloss An indicator that equals to one if a firm has tax-loss carry-forwards in any of the past three years, and zero otherwise.
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