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An Examination of Initial Shareholdings in Tender Offer Bids

  • Asquith, Daniel
  • Kieschnick, Robert
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    We examine the initial shareholdings taken by bidders prior to making tender offer bids ('toeholds') in order to test predictions of selected models of tender offers. Our data suggest a significantly negative relationship between first bidder premia and toeholds, which is consistent with the models of Shleifer and Vishny (1986) and Hirshleifer and Titman (1990), but inconsistent with the models of Harrington and Prokop (1993), Chowdhry and Jagadeesh (1994), and Burkart (1995). Copyright 1999 by Kluwer Academic Publishers

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    Article provided by Springer in its journal Review of Quantitative Finance and Accounting.

    Volume (Year): 12 (1999)
    Issue (Month): 2 (March)
    Pages: 171-88

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    Handle: RePEc:kap:rqfnac:v:12:y:1999:i:2:p:171-88
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    1. Harrington, Joseph E, Jr & Prokop, Jacek, 1993. "The Dynamics of the Free-Rider Problem in Takeovers," Review of Financial Studies, Society for Financial Studies, vol. 6(4), pages 851-82.
    2. Walkling, Ralph A., 1985. "Predicting Tender Offer Success: A Logistic Analysis," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 20(04), pages 461-478, December.
    3. Jarrell, Gregg A & Poulsen, Annette B, 1989. "Stock Trading before the Announcement of Tender Offers: Insider Trading or Market Anticipation?," Journal of Law, Economics and Organization, Oxford University Press, vol. 5(2), pages 225-48, Fall.
    4. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-88, June.
    5. Bradley, Michael & Desai, Anand & Kim, E. Han, 1988. "Synergistic gains from corporate acquisitions and their division between the stockholders of target and acquiring firms," Journal of Financial Economics, Elsevier, vol. 21(1), pages 3-40, May.
    6. Albert S. Kyle & Jean-Luc Vila, 1991. "Noise Trading and Takeovers," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 54-71, Spring.
    7. Burkart, Mike, 1995. " Initial Shareholdings and Overbidding in Takeover Contests," Journal of Finance, American Finance Association, vol. 50(5), pages 1491-1515, December.
    8. Pound, John & Zeckhauser, Richard J, 1990. "Clearly Heard on the Street: The Effect of Takeover Rumors on Stock Prices," The Journal of Business, University of Chicago Press, vol. 63(3), pages 291-308, July.
    9. Bradley, Michael & Jarrell, Gregg A & Kim, E Han, 1984. " On the Existence of an Optimal Capital Structure: Theory and Evidence," Journal of Finance, American Finance Association, vol. 39(3), pages 857-78, July.
    10. Chowdhry, Bhagwan & Jegadeesh, Narasimhan, 1994. "Pre-Tender Offer Share Acquisition Strategy in Takeovers," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 29(01), pages 117-129, March.
    11. Schwert, G.W., 1994. "Mark-up Pricing in Mergers and Acquisitions," Papers 95-01, Rochester, Business - Financial Research and Policy Studies.
    12. Bagwell, Laurie Simon, 1992. " Dutch Auction Repurchases: An Analysis of Shareholder Heterogeneity," Journal of Finance, American Finance Association, vol. 47(1), pages 71-105, March.
    13. Hirshleifer, David & Titman, Sheridan, 1990. "Share Tendering Strategies and the Success of Hostile Takeover Bids," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 295-324, April.
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