IDEAS home Printed from https://ideas.repec.org/a/fma/fmanag/andersondyl04.html
   My bibliography  Save this article

Operating Determinants of Premiums on Self-Tender Offers

Author

Listed:
  • Anne M. Anderson
  • Edward A. Dyl

Abstract

We investigate why firms pay a premium when making a tender offer to repurchase shares, and if the size of the premium is related to the elasticity of the supply curve for the firm’s stock. We find that premiums on self-tender offers are related to characteristics of tendering firms, and to variables that are proxies both for the capital gains and for the information content of the announcement. Our results indicate that stock price inelasticity, caused by taxes, is an important determinant of offer premiums for fixed-price self-tender offers. We also find that the information conveyed by the offer, measured by the post-expiration appreciation of the firm’s stock, is contained in the tender offer premium, and that offer premiums are inversely related to firm size and to preoffer stock performance. In addition, we present evidence that share repurchase tender offers may frequently be oversubscribed by design.

Suggested Citation

  • Anne M. Anderson & Edward A. Dyl, 2004. "Operating Determinants of Premiums on Self-Tender Offers," Financial Management, Financial Management Association, vol. 33(1), Spring.
  • Handle: RePEc:fma:fmanag:andersondyl04
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nandkumar Nayar & Ajai K. Singh & Allan A. Zebedee, 2008. "Share Repurchase Offers and Liquidity: An Examination of Temporary and Permanent Effects," Financial Management, Financial Management Association International, vol. 37(2), pages 251-270, June.
    2. Christine Brown & Daniel Norman, 2010. "Management choice of buyback method: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(4), pages 767-782, December.
    3. Hue Hwa Au Yong & Christine Brown & Chloe Choy Yeing Ho, 2014. "Off-Market Buybacks in Australia: Evidence of Abnormal Trading around Key Dates," International Review of Finance, International Review of Finance Ltd., vol. 14(4), pages 551-585, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fma:fmanag:andersondyl04. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Courtney Connors (email available below). General contact details of provider: https://edirc.repec.org/data/fmaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.