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Measuring Deal Premiums in Takeovers


  • Harold Mulherin,

  • Serif Aziz Simsir

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    • Harold Mulherin is a Professor in the Department of Finance, Terry College of Business at the University of Georgia in Athens, GA. Serif Aziz Simsir is an Assistant Professor in the Sabanci School of Management at Sabanci University in Istanbul, Turkey.

  • We gratefully acknowledge helpful feedback and comments from Raghavendra Rau (Editor), Basak Tanyeri, Burcu Esmer, Gul Demirtas, Birgul Arslan, and the seminar participants at Bilkent University. We thank Hasan Burak Arslan and Baris Korcan Ak for their excellent research assistance and Yigit Atilgan for his financial contribution to our project.


We investigate whether the merger announcement dates provided in the Securities Data Corporation (SDC) database are handled correctly by researchers performing event studies. We find that in 24.1% of deals, the popular choice of using the SDC's “Date Announced” field as the event date leads to biased estimates of target firm abnormal returns because of earlier abnormal price movements due to merger-related events such as merger rumors or search-for-buyer types of announcements. We hand collect the merger-related events from news sources and make the complete data set publicly available at the Financial Management website.