EARNINGS SIGNALS IN FIXED-PRICE AND DUTCH AUCTION SELF-TENDER OFFERS

Studies by Vermaelen (1981) and others indicate that the positive exce ss stock returns around self-tender offer announcements are the result of a signal of future earnings improvements. Comment and Jarrell (199 1), Lee, Mikkelson and Partch (1992) and Persons (1994) argue that the signal in fixed-price self-tender offers should be stronger than the signal in Dutch auction self-tender offers. This study tests whether t he earnings improvement following fixed-price self-tender offers is gr eater than that following Dutch auction self-tender offers. We find so me evidence that earnings improve following both types of self-tender offers. However, we find no difference in earnings improvement between the two types of offers. (C) 1998 Elsevier Science S.A. All rights re served.