A Reexamination of the Tendering Profit Anomaly
Abstract
Lakonishok and Vermaelen (J Financ 45:455–477, 1990) and Peyer and Vermaelen (Rev Financ Stud 22:1693–1745, 2009) document profits of around 9% from participating in stock repurchase tender offers during the 1962–1986 and 1987–2001 periods, respectively. The persistence of such large profits over a short trading horizon constitutes a striking anomaly in financial markets. Given the rise of event-driven hedge funds, we reexamine this strategy in recent years (2000–2015) and find that abnormal profits from tendering have disappeared. Examining a sample of closed-end fund repurchase tender offers during the same period, we find abnormal tendering profits of around 0.5%. However, these profits are no longer significant after adjustments for transaction costs.
Recommended Citation
Kadapakkam, P. R., Zhang, H., & Yildirim, S. (2020). A Reexamination of the Tendering Profit Anomaly. Review of Quantitative Finance and Accounting Springer.
The definitive version is available at https://doi.org/10.1007/s11156-020-00935-4
Department(s)
Business and Information Technology
Keywords and Phrases
Closed-End Funds; Market Efficiency; Tender Offer Repurchases; Tendering Profits
International Standard Serial Number (ISSN)
0924-865X; 1573-7179
Document Type
Article - Journal
Document Version
Citation
File Type
text
Language(s)
English
Rights
© 2020 Springer, All rights reserved.
Publication Date
29 Sep 2020
