College of Commerce and Business Administration, University of Illinois at Urbana-Champaign and INSEAD, respectively. Theo Vermaelen is also Hoogleraar at the University of Limburg. We are grateful to Peter Bossaerts, David Brown, Frank Buckley, Louis Chan, Harry DeAngelo, Steve Foerster, Paul Halpern, Pierre Hillion, Myron Gordon, David Ikenberry, Han Kim, Chuck Linke, René Stulz, Seymour Smidt, and an anonymous referee for their helpful comments and to Andy Chen and Mark Ready for research assistance. This paper has been presented at the Western Finance Association meetings in Seattle, at the European Finance Association meetings in Istanbul, at a conference on Reappraisal of the Efficiency of Financial Markets in Sesimbra, Portugal, at a conference on portfolio management at the European Institute for Advanced Studies in Management in Brussels, University of Arizona, University of Alberta, University of California, Irvine, Concordia University, INSEAD, University of Illinois at Urbana-Champaign, University of Toronto, Swedish School of Economics and Business Administration in Helsinki, University of Michigan, University of Western Ontario, UCLA, the London Business School, and the Stockholm School of Economics. We would like to thank the seminar participants for their comments.
Anomalous Price Behavior Around Repurchase Tender Offers
Article first published online: 30 APR 2012
1990 The American Finance Association
The Journal of Finance
Volume 45, Issue 2, pages 455–477, June 1990
How to Cite
LAKONISHOK, J. and VERMAELEN, T. (1990), Anomalous Price Behavior Around Repurchase Tender Offers. The Journal of Finance, 45: 455–477. doi: 10.1111/j.1540-6261.1990.tb03698.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
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, we 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.