Journal of Finance Vol. 46 No. 4 1991
The Relative Signalling Power of Dutch-Auction and Fixed-Price Self-Tender Offers and Open-Market Share Repurchases.
Abstract
The authors compare three forms of common stock repurchases. Dutch-auction self-tender offers and open-market share repurchase programs are weaker signals of stock undervaluation than fixed-price self-tender offers. The price increase from buyback announcements is greater when insider wealth is at risk, greater following negative net-of-market stock returns, and unrelated to prior market returns. Buyback announcement returns are also increasing in the fraction of shares sought, which is consistent with both signaling and an upward-sloping supply curve for stock.
- Volume
- 46
- Issue
- 4
- Pages
- 1243-71
- Sources
- bibtex:phds-export.bib