Uncertainty During Tender Offers and the Measurement of Shareholder Wealth Effects
Uncertainty concerning the ultimate outcome of tender offers may affect the measurement of changes in shareholder wealth. The uncertainty regarding the outcome of tender offers is measured by estimating the probability of acceptance of tender offers during the period when the tender offers are outstanding. The estimated probability of acceptance of tender offers implies that the amount of uncertainty prior to knowledge of the ultimate outcome is substantial and affects the measurement of expected equity gains. The uncertainty-adjusted measure of the change in shareholder wealth indicates that previous studies may have underestimated the gains expected to result from tender offers.
Recommended CitationBowers, Helen M.; Roenfeldt, Rodney L.; and Trifts, Jack, "Uncertainty During Tender Offers and the Measurement of Shareholder Wealth Effects" (1991). Finance Journal Articles. Paper 25.