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A Test for Price Pressure Effects in Tender Offer Stock Repurchases
Author(s) -
Davidson Wallace N.,
Chhachhi Indudeep,
Glascock John L.
Publication year - 1996
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1996.tb00862.x
Subject(s) - tender offer , expiration , stock (firearms) , stock price , economics , monetary economics , financial economics , business , finance , series (stratigraphy) , medicine , biology , respiratory system , engineering , shareholder , mechanical engineering , paleontology , corporate governance
Abstract The evidence in this paper supports the hypothesis that the previously documented stock price reversal following a tender offer announcement is consistent with a price pressure caused by a temporary shift in the security's demand curve. The authors came to this conclusion by redocumenting the price reversal, by finding an increase in trading volume around the tender offer announcement and expiration, by showing the increase in volume to be larger than expected from only an information effect, and by showing that short selling activity increases after the announcement and before the expiration of the tender offer.