This paper analyzes the relationship between the merger announcement returns and the bidding firms\u27 preparations for mergers. In this study, merger preparations are defined as bidding firms\u27 adaptive actions of changing their executives prior to mergers. An analysis of the relative effectiveness of merger preparations is conducted through event study for univariate tests. In addition, a regression for multivariate tests analyzes incentives for making merger preparations. The results of these studies indicate that (1) hiring of new executives from outside the target proves to be the most effective merger preparation, (2) firms who make merger preparations have higher returns, and (3) hiring of new executives from the targets proves to have negative effects on bidding firms\u27 returns, though this can vary based on the relative size of the target
