Do Firms Undertake Self-Tender Offers to Optimize Capital Structure?

Erik Lie
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Erik Lie: College of William and Mary

The Journal of Business, 2002, vol. 75, issue 4, 609-640

Abstract: This study investigates capital structure around 286 self-tender offers from 1980 to 1997. Firms that undertake self-tender offers generally have debt ratios below their predicted levels before the offers. The debt ratios following nondefensive self-tender offers are close to predicted levels, while the ratios following defensive self-tender offers are above predicted levels. Further, 20% and 43% of the debt ratings are downgraded following nondefensive and defensive self-tender offers, respectively. Finally, the increases in debt ratios around the offers are negatively related to the difference from the predicted debt ratio before the offers.

Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jnlbus:v:75:y:2002:i:4:p:609-640

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