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
Date Written: June 22, 2006
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: Suggested Citation