Description:
AbstractWe examine financial analysts' earnings revisions after self‐tender offers. Consistent with the assertions of earlier studies that self‐tender offers signal future performance, financial analysts significantly increase their forecasts of earnings for firms that announce self‐tender offers. However, the revisions differ based on the method chosen to repurchase shares. For Dutch auction offers, analysts significantly revise their estimates of short‐term earnings only. For fixed‐price tender offers, analysts increase both short‐term and long‐term earnings estimates. Also, long‐term earnings revisions are significantly related to announcement‐period abnormal returns for fixed‐price tender offers, which suggests that fixed‐price self‐tender offers convey more positive information about future earnings than do Dutch auction offers.