Information incentives for shareholders in tender offer share repurchases

摘要

In this dissertation, I develop a model of a tender offer share repurchase. The theoretical model is a game between company management and heterogeneously informed shareholders. Management does not know the true company value when it sets the repurchase price and quantity. Informed shareholders tender strategically based on their private information and management's repurchase offer. Consequently, the repurchase outcome reveals information about shareholder values to the market. The strategic actions of informed shareholders greatly influence management's choice of the repurchase price and quantity.;The hypothesis of private shareholder information is tested empirically with tender offer repurchase data from 1984 to 1997. The results indicate that shareholder information significantly influences price changes at the expiration of a repurchase in the direction predicted by the theoretical model. Analysis of tendering patterns in a comparison between Dutch auction and fixed-price tender offers indicates substantially different shareholder behavior across the two offer types.