Journal of Banking & Finance Vol. 25 No. 3 2001
Share repurchase tender offers and bid–ask spreads
Abstract
This paper examines the impact of share repurchase tender offers on the market microstructure. We find that there is a temporary reduction in the bid–ask spread, and a temporary increase in volume and quotation depth during the offer period. Our evidence suggests that the bid–ask spread is asymmetric during the offer period with the bid-side spread smaller than the ask-side spread. The temporary reduction in the spread around offers is consistent with the competing-market-maker hypothesis which predicts that the intensified competition for the market maker raises bid prices and narrows the spread asymmetrically during the offer period.
- DOI
- 10.1016/s0378-4266(00)00084-4
- Volume
- 25
- Issue
- 3
- Pages
- 445-478
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib