Earnings and risk changes around stock repurchase tender offers

Michael Hertzel, Prem C. Jain

Research output: Contribution to journalArticlepeer-review

72 Scopus citations


This paper provides evidence that repurchase tender offer announcements convey favorable information about the level and riskiness of future earnings. We show that analysts revise their forecasts of earnings per share upward following repurchase announcements. Repurchase announcement stock price reactions are positively correlated with revisions in short-term forecasts, but not correlated with revisions in long-term forecasts. Thus, the information is primarily about transitory changes in earnings. We also provide evidence that equity betas decline after repurchases. Our findings indicate that the equity beta decreases are due to decreases in the underlying riskiness of the firm's assets.

Original languageEnglish (US)
Pages (from-to)253-274
Number of pages22
JournalJournal of Accounting and Economics
Issue number3
StatePublished - Sep 1991

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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