Cause and effect of mini-tender offers

Mini-tender offers are unique because they are commonly made at an offer price below the prevailing market price. They appear to focus on quickly arbitraging investors who are irrational or uninformed and thus do not capitalize on their potential for governing the target. We find that firms targeted for mini-tender offers are relatively large and experience weaker performance than other same-industry firms. Sample firms subjected to mini-tender offers experience significant negative announcement effects. The negative announcement effects are more pronounced for firms that exhibit a higher level of stock volatility, a lower level of institutional ownership, and that have been the target of a recent lawsuit.