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

Erik Lie
The Journal of Business
Vol. 75, No. 4 (October 2002), pp. 609-639
DOI: 10.1086/341637
Stable URL:
Page Count: 31
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Do Firms Undertake Self‐Tender Offers to Optimize Capital Structure?
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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.

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