Title: Share repurchase tender offers and bid–ask spreads
Abstract: This paper examines the impact of share repurchase tender offers on the market microstructure. We find that there is a temporary reduction in the bid–ask spread, and a temporary increase in volume and quotation depth during the offer period. Our evidence suggests that the bid–ask spread is asymmetric during the offer period with the bid-side spread smaller than the ask-side spread. The temporary reduction in the spread around offers is consistent with the competing-market-maker hypothesis which predicts that the intensified competition for the market maker raises bid prices and narrows the spread asymmetrically during the offer period.
Publication Year: 2001
Publication Date: 2001-03-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 25
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