Do Firms Undertake Self-Tender Offers to Optimize Capital Structure?

This study investigates capital structure around 286 self-tender offers from 1980 to 1997. Firms that undertake self-tender offers generally have debt ratios below their predicted levels before the offers. The debt ratios following nondefensive self-tender offers are close to predicted levels, while the ratios following defensive self-tender offers are above predicted levels. Further, 20% and 43% of the debt ratings are downgraded following nondefensive and defensive self-tender offers, respectively. Finally, the increases in debt ratios around the offers are negatively related to the difference from the predicted debt ratio before the offers.