The board of directors of Intuitive Surgical (NasdaqGS:ISRG) announced on Tuesday an increase in its share repurchase programme to USD3.0bn in open market purchases, privately negotiated transactions, accelerated share repurchase programmes, issuer self-tender offers
Lie (2002) specifically tests whether tender offers are used to optimize capital structure and provides evidence that firms initiate self-tender offers when ex ante debt levels are below predicted levels.
Dyl, 2004, "Determinants of Premiums on Self-Tender Offers," Financial Management 33, 25-45.
Jarrell, "The relative power of Dutch-auction and fixed-priced self-tender offers and open market share repurchases," Journal of Finance, vol.
Peterson, "Self-tender offers: The effect of free cash flow, cash-flow signaling and measurement of Tobin's q," Journal of Banking and Finance, vol.
Lie and McConnell (1998) examined whether earnings improvement following fixed-price self-tender offers is greater than the Dutch auction self-tender offers, and concluded that there was evidence of earnings improvement following both types of self-tender offers.
Jarrell, 1991, "The Relative Signaling Power of Dutch Auction and Fixed- Price Self-Tender Offers and Open Market Share Repurchases," Journal of Finance (46) 1243-1271.
. A self-tender offer
is undertaken by a target to buy its own stock in the face of a hostile takeover.
Also, since our sample is drawn from a later period, we perform this analysis to confirm that our sample's price effects are comparable to those reported in earlier studies of self-tender offers (e.g., Bagwell, 1992, for DA repurchases, and Dann, 1981, for FPTO repurchases).
We examine the impact of share repurchase programs on liquidity for those self-tender offers in which we are able to definitively identify the timing, quantity, and price of the repurchase transactions.
We find that premiums on self-tender offers
are related to characteristics of tendering firms, and to variables that are proxies both for the capital gains and for the information content of the announcement.
DUTCH AUCTION VERSUS FIXED-PRICE SELF-TENDER OFFERS
: DO FIRMS OVERPAY IN FIXED-PRICE OFFERS?