Why Do Shareholders Tender? Shareholder Reactions to Tender Offers: Evidence from Germany

U of Mannheim Finance Working Paper No. 2006-02

41 Pages Posted: 27 Sep 2006

See all articles by Silvia Elsland

Silvia Elsland

University of Mannheim

Martin Weber

University of Mannheim - Department of Banking and Finance

Date Written: June 22, 2006

Abstract

Many characteristics of tender offers have been discussed and analyzed in the literature as having significant effects on the tendering behavior of shareholders. In this analysis we focus on information easily accessible to outstanding shareholders, either given in the offer document or in stock prices. We test the effects of these factors on a dataset comprising 105 tender offers in Germany realized between 2002 and 2005, regulated by the German Securities Acquisition and Takeover Act (WpÜG). Our main results can be summarized as follows. We find a significant positive relation between a high tendering rate and target managements' recommendations to tender. Furthermore, we find significant differences in the tendering behavior for the different offer types. Finally, our findings show a significant positive relation between the relative compensation (i.e. the compensation relative to the difference between the 52 week high and 52 week low) and the tendering behavior. The analysis shows that both offer characteristics, as well as behavioral characteristics, influence the tendering behavior of shareholders.

Keywords: Tender offers, tendering behavior

JEL Classification: G34

Suggested Citation

Elsland, Silvia and Weber, Martin, Why Do Shareholders Tender? Shareholder Reactions to Tender Offers: Evidence from Germany (June 22, 2006). U of Mannheim Finance Working Paper No. 2006-02, Available at SSRN: https://ssrn.com/abstract=933077 or http://dx.doi.org/10.2139/ssrn.933077

Silvia Elsland (Contact Author)

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

Martin Weber

University of Mannheim - Department of Banking and Finance ( email )

D-68131 Mannheim
Germany
+49 621 181 1532 (Phone)
+49 621 181 1534 (Fax)

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