Journal of Accounting and Economics Vol. 14 No. 3 1991

Repurchase tender offers and earnings information

Larry Y. Dann^1,2,3; Ronald W. Masulis^1,2,3; David Mayers^4,1,2,3

¹ University of Oregon · ² Vanderbilt University · ³ The Ohio State University · ⁴ University of California, Riverside

Abstract

Announcements of stock repurchase tender offers are examined as a source of information about firms' future earnings prospects and market risk levels. We document positive earnings surprises and equity systematic risk reduction following tender offers. Announcement stock price reactions are positively correlated with earnings surprises over the concurrent and subsequent two years, and negatively correlated with changes in equity market risk. Finally, stock price reactions to quarterly earnings announcements are more strongly correlated with time-series based earnings surprises in the year prior to the tender offer than during the subsequent year, consistent with tender offer announcements conveying earnings information.

DOI

10.1016/0165-4101(91)90013-e

Volume

14

Issue

3

Pages

217-251

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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