Note(s): This table reports the results of multivariate DID regressions on the number of M&As for the pilot and the control firms over the periods before, during, and after Regulation SHO's pilot program. The left and right columns report the results of high-MB-ratio and high-accruals firms, respectively. Firms with a high MB ratio or accruals are more likely to be overvalued. The accruals are calculated as follows

$Accrualsi,t=Earningsi,t−CFOi,tAverage_Total_Assetsi,t,$

where Earnings_i,t is earnings before extraordinary items (Compustat item No. 123) and CFO_i,t is cash flow from operating activities (Compustat item No. 308). We use the information about the MB ratio and accruals in 2003, immediately before the start of Regulation SHO's pilot program, to group firms into two subsamples. We define a firm with an MB ratio (accruals) above the median as a high-MB-ratio (-accruals) firm. We estimate the multivariate DID panel regression as follows

$Ln_(1+Counti,t)=α0+β1Piloti×Duringt+β2Piloti×Aftert+β3Piloti+β4Duringt+β5Aftert+β6Xi,t+εi,t.$

In this model, Ln_(1 + Count_i,t) is the natural logarithm of (1 + Count_i,t), while Count_i,t is the total number of M&As announced by firm i in a given year t. Pilot_i equals one if firm i belongs to the pilot group and zero otherwise. After_t is a dummy variable that equals one if the year is during the Post period (2007 to 2010). X_i,t is the set of controlling variables including return on assets (ROA), market-to-book ratio (MB_Ratio), leverage (Leverage), size (Ln_MV), sales (Ln_Sales), capital expenditures (CAPEX), R&D expenditures (RDX), and cash and short-term investment (Cash). If we add a firm fixed effect in the panel regression, we omit Pilot_i in that column to avoid multicollinearity. We cluster the standard errors at the firm level. For simplicity, we do not report the coefficients of the control variables. ^***, ^**, and ^* denote significance at the 1%, 5%, and 10% level, respectively