Premium
Tender‐offer premia as a management signal
Author(s) -
Polonchek John A.,
Slovin Myron B.,
Sushka Marie E.
Publication year - 1986
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090070113
Subject(s) - tender offer , stock (firearms) , business , signalling , monetary economics , stock market , stock dilution , share price , restricted stock , shares outstanding , stock price , executive compensation , economics , financial economics , finance , microeconomics , stock exchange , shareholder , corporate governance , mechanical engineering , paleontology , horse , series (stratigraphy) , biology , engineering
In this paper we test whether tender‐offer premia for share repurchases can be viewed as an outgrowth of optimizing behavior by managers in a signalling environment. This is in contrast to previous work on the signalling hypothesis which focuses on the stock market's reaction to the announcement of tender offers. Our empirical results indicate that premia are systematically related to the price of the firm's stock and the level of the stock market but are not related to either management compensation, inside holdings of stock or the ratio of shares sought to total shares.