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The Determinants of Tendering Rates in Interfirm and Self-Tender Offers

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  • Brown, David T
  • Ryngaert, Michael D

Abstract

The authors estimate the determinants of shareholder heterogeneity by examining the shareholder responses to fixed-price self-tender offers and two-tier interfirm tender offers. Tendering rates are increased in the cash price relative to the postoffer price of the stock. Proxies for capital gains' tax liabilities also explain tendering rates. Controlling for the cash tender relative to the postoffer price of the stock, the authors find that tendering rates are significantly higher in interfirm tender offers than in self-tender offers, which indicates that shareholders view accepting another firm's stock as an unattractive means of avoiding capital gains. Copyright 1992 by University of Chicago Press.

Suggested Citation

  • Brown, David T & Ryngaert, Michael D, 1992. "The Determinants of Tendering Rates in Interfirm and Self-Tender Offers," The Journal of Business, University of Chicago Press, vol. 65(4), pages 529-556, October.
    • Handle: RePEc:ucp:jnlbus:v:65:y:1992:i:4:p:529-56
    DOI: 10.1086/296584
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    Cited by:

    1. Jaclyn Beierlein & Hideaki Kiyoshi Kato, 2003. "Do Uniform Price Auctions Trade‐off Higher Risk for Higher Return?," International Review of Finance, International Review of Finance Ltd., vol. 4(1‐2), pages 1-27, March.
    2. Hodrick, Laurie Simon, 1999. "Does stock price elasticity affect corporate financial decisions?," Journal of Financial Economics, Elsevier, vol. 52(2), pages 225-256, May.
    3. Chris Mitchell, 2019. "The Lock-In Effect and the Corporate Payout Puzzle," ISER Discussion Paper 1070r, Institute of Social and Economic Research, Osaka University, revised Aug 2021.
    4. Ali Akyol & Jin S. Kim & Chander Shekhar, 2014. "The Causes and Consequences of Accelerated Stock Repurchases," International Review of Finance, International Review of Finance Ltd., vol. 14(3), pages 319-343, September.
    5. Chris Mitchell, 2019. "The Lock-In Effect and the Corporate Payout Puzzle," ISER Discussion Paper 1070, Institute of Social and Economic Research, Osaka University.
    6. Hsinan Hsu & Tsung-Che Wu & Grace Shu-hsing Wu & Ya-Hui Chang, 2016. "Heterogeneity of Trading Information and the Price-Volume Relationship: Theory and Evidence," Accounting and Finance Research, Sciedu Press, vol. 5(1), pages 232-232, February.
    7. William J. Breen & Laurie Simon Hodrick & Robert A. Korajczyk, 2002. "Predicting Equity Liquidity," Management Science, INFORMS, vol. 48(4), pages 470-483, April.
    8. Billett, Matthew T. & Ryngaert, Mike, 1997. "Capital structure, asset structure and equity takeover premiums in cash tender offers," Journal of Corporate Finance, Elsevier, vol. 3(2), pages 141-165, April.
    9. Dhaliwal, Dan & Zhen Li, Oliver & Trezevant, Robert, 2003. "Is a dividend tax penalty incorporated into the return on a firm's common stock?," Journal of Accounting and Economics, Elsevier, vol. 35(2), pages 155-178, June.

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