Why Do Firms Still Tender Offer?
Date Issued
2007
Date
2007
Author(s)
Wu, Yu-Ying
DOI
en-US
Abstract
This paper examines on firms' choices of repurchase terms and analyzes firms' characteristics to understand the information revealed by their choices of activities. A sample of 317 tender offers and 7909 open market repurchases that took place between January 1985 and December 2004 are investigated. The objective is to assess which types of companies will prefer to choose tender offers as their repurchase method, even-though the cost of conducting such method is much higher than open-market repurchases. As the results, companies with smaller size, higher cash-flow, and higher leverage ratio are likely to adopt tender offers as their means for distributing excess cash, preventing hostile take over, and providing strong signalling effectiveness to the market accordingly.
Subjects
庫藏股
Tender offers
Open-Market Repurchase
Signalling Hypothesis
Agency Cost of Free Cash Flow
Leverage
Catering Theory
Type
thesis
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