Journal of Economics and Finance

, Volume 31, Issue 3, pp 331–340

How useful are signals? A micro-structure analysis


DOI: 10.1007/BF02885723

Cite this article as:
O’Neill, M. & Swisher, J. J Econ Finan (2007) 31: 331. doi:10.1007/BF02885723


We analyze how the market processes a signaling event by studying a sample of self-tender offers, events often viewed as signals of firm value. By examining changes in the degree of informed trading, we find asymmetric information costs fall at announcement, remain low throughout the event, and increase at offer expiration. By one month following expiration, informed trading returns to a level not significantly different from that prior to the offer. Higher risk firms have significantly larger declines in information asymmetry during the offer. Increases in information asymmetry persist one month following expiration for firms with lower pre-offer informed trading. (JEL G14, G32)

Copyright information

© Springer 2007

Authors and Affiliations

  1. 1.College of Business and EconomicsUniversity of IdahoUSA
  2. 2.Haworth College of BusinessWestern Michigan UniversityUSA