TENDER OFFERS IN SOUTH AMERICA: DO THEY CONVEY GOOD NEWS TO THE MARKET?

Authors

  • Darcy Fuenzalida Doctor en Ciencias Empresariales de la Universidad de Lleida, España. Magíster en Economía de la Universidad Católica de Chile e Ingeniero Civil Químico de la Universidad Federico Santa María, Chile. Profesor del Departamento de Industrias de la Universidad Federico Santa María.
  • Samuel Mongrut Doctor en Economía Financiera por la Universidad de Barcelona, España. Magíster en Economía de la Universidad de Maastricht, Holanda y Licenciado en Administración de Empresas de la Universidad del Pacífico, Perú. Profesor e investigador de la Universidad del Pacífico.
  • Mauricio Nash MBA, Magíster en Gestión Empresarial, Ingeniero en Control de Gestión y Contador Auditor. Se desempeña como funcionario en el Banco Santander Santiago.
  • Juan Tapia Ingeniero Comercial de la Universidad Federico Santa María de Chile. Profesor e investigador en el Departamento de Industrias de la Universidad Federico Santa María en Valparaíso, Chile.

Keywords:

Tender offer, abnormal return, emerging market

Abstract

Different studies in developed capital markets have found positive abnormal returns of at least 15% during the announcement date of a tender offer. Although there are almost no studies for South American stock markets, some studies reported positive abnormal returns, ranging from 25% to 50%, related to the announcement of the first tender offer. In this study one argues that estimated positive abnormal returns in emerging markets are high because studies have assumed a completely segmented capital market by applying the market model with a local stock market index. By allowing for partial integration among five South American emerging markets, one shows that there are in fact positive abnormal returns previously, during, and after the announcement date of the first tender offer. However, the positive abnormal return associated to the announcement date is in the order of 8%. A slightly higher abnormal return is obtained using a market model that accounts for partial integration and downside risk. These results prompt towards a lower positive abnormal return in the sample of South American firms studied.

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Published

2006-12-31

Issue

Section

Research articles

How to Cite

TENDER OFFERS IN SOUTH AMERICA: DO THEY CONVEY GOOD NEWS TO THE MARKET?. (2006). Estudios Gerenciales, 22(101), 13-36. https://www2.icesi.edu.co/revistas/index.php/estudios_gerenciales/article/view/206