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Anomalous Price Behavior around Repurchase Tender Offers

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Author Info
 Lakonishok, Josef
Vermaelen, Theo

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Abstract

This paper reports anomalous price behavior around repurchase tender offers. Buying shares before the expiration date of a repurchase tender offer and tendering to the firm produces, on average, abnormal returns of more than 9 percent over a period shorter than one week. In addition, the authors find that repurchasing companies experience economically and statistically significant abnormal returns in the two years after the repurchase. The upward price drift is mainly caused by the behavior of the small firms in the sample. Copyright 1990 by American Finance Association.

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Publisher Info
Article provided by American Finance Association in its journal Journal of Finance.

Volume (Year): 45 (1990)
Issue (Month): 2 (June)
Pages: 455-77
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Handle: RePEc:bla:jfinan:v:45:y:1990:i:2:p:455-77

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  1. Terrance Odean, 1998. "Volume, Volatility, Price and Profit When All Traders Are Above Average," Finance 9803001, EconWPA. [Downloadable!]
  2. Hirshleifer, David & Jiang, Danling, 2007. "Commonality in Misvaluation, Equity Financing, and the Cross Section of Stock Returns," MPRA Paper 5618, University Library of Munich, Germany. [Downloadable!]
  3. Michael Cooper & David H. Downs, 1999. "Real Estate Securities and a Filter-based, Short-term Trading Strategy," Journal of Real Estate Research, American Real Estate Society, vol. 18(2), pages 313-334. [Downloadable!]
  4. David Ikenberry & Josef Lakonishok & Theo Vermaelen, 1999. "Stock Repurchases in Canada: Performance and Strategic Trading," NBER Working Papers 7325, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. David Ikenberry & Josef Lakonishok & Theo Vermaelen, 1994. "Market Underreaction to Open Market Share Repurchases," NBER Working Papers 4965, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Jong, A. de & Dijk, R. van & Veld, C.H., 2001. "The Dividend and Share Repurchase Policies of Canadian Firms," Research Paper ERS-2001-88-F&A Revision_, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  7. James C. Brau & Andrew Holmes, 2006. "Why Do REITs Repurchase Stock? Extricating the Effect of Managerial Signaling in Open Market Share Repurchase Announcements," Journal of Real Estate Research, American Real Estate Society, vol. 28(1), pages 1-24. [Downloadable!]
  8. Tung Liang Liao & Mei-Chu Ke & Hsiang-Tai Yu, 2005. "Anomalous price behaviour around stock repurchases on the Taiwan stock exchange," Applied Economics Letters, Taylor and Francis Journals, vol. 12(1), pages 29-39, January. [Downloadable!] (restricted)
  9. William R. Nelson, 1999. "Evidence of excess returns on firms that issue or repurchase equity," Finance and Economics Discussion Series 1999-06, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  10. Terrance Odean., 1996. "Volume, Volatility, Price and Profit When All Trader Are Above Average," Research Program in Finance Working Papers RPF-266, University of California at Berkeley. [Downloadable!]
  11. Beverly Hirtle, 2001. "How do stock repurchases affect bank holding company performance?," Staff Reports 123, Federal Reserve Bank of New York. [Downloadable!]
  12. Carol Alexander & Anca Dimitriu, 2005. "Indexing, cointegration and equity market regimes," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 10(3), pages 213-231. [Downloadable!]
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