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Anomalous Price Behavior Around Repurchase Tender Offers
Author(s) -
LAKONISHOK JOSEF,
VERMAELEN THEO
Publication year - 1990
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.1540-6261.1990.tb03698.x
Subject(s) - tender offer , business , procurement , sample (material) , expiration , monetary economics , commerce , economics , finance , marketing , corporate governance , shareholder , medicine , chemistry , chromatography , respiratory system
This paper reports anomalous price behavior around repurchase tender offers. Buying shares before the expiration date of a repurchase tender offer and tendering to the firm produces, on average, abnormal returns of more than 9 percent over a period shorter than one week. In addition, we find that repurchasing companies experience economically and statistically significant abnormal returns in the two years after the repurchase. The upward price drift is mainly caused by the behavior of the small firms in the sample.