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Price Movements as Indicators of Tender Offer Success
Author(s) -
SAMUELSON WILLIAM,
ROSENTHAL LEONARD
Publication year - 1986
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1986.tb05050.x
Subject(s) - tender offer , economics , financial economics , cash , econometrics , market price , stock (firearms) , stock price , monetary economics , microeconomics , finance , shareholder , series (stratigraphy) , corporate governance , biology , engineering , mechanical engineering , paleontology
This paper examines movements in the prices of target stocks as predictors of the ultimate success or failure of tender offers. An empirical investigation of 100% cash tender offers during the years 1976 to 1981 leads to the conclusion that, with few exceptions, market prices are well‐calibrated, i.e., the current target price during the offer period measures the expected (discounted) stock price at the conclusion date. The market's probability predictions improve monotonically over time.