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Price Performance Following Share‐Repurchase Announcements by Closed‐End Funds

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  • Aigbe Akhigbe
  • Doseong Kim
  • Jeff Madura

Abstract

We investigate the price performance of closed‐end funds that announce share‐repurchase programs. Closed‐end funds experience positive average stock‐price reactions to the announcements. The long‐run buy‐and‐hold abnormal returns of repurchasing funds over the subsequent three years are significantly higher than a nonrepurchasing control sample matched by size, type, investment style and geographic diversification. Funds with larger discounts, international funds, equity funds, and funds that announce larger repurchases or frequently announce repurchases, experience more positive stock‐price reactions. Except for larger repurchases, the same characteristics are associated with more positive long‐run buy‐and‐hold returns.

Suggested Citation

  • Aigbe Akhigbe & Doseong Kim & Jeff Madura, 2007. "Price Performance Following Share‐Repurchase Announcements by Closed‐End Funds," The Financial Review, Eastern Finance Association, vol. 42(4), pages 537-555, November.
    • Handle: RePEc:bla:finrev:v:42:y:2007:i:4:p:537-555
    DOI: 10.1111/j.1540-6288.2007.00182.x
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    Cited by:

    1. Jingfeng An & Gordon Gemmill & Dylan C. Thomas, 2012. "The Agency Effect of Repurchases on Closed†End Funds," European Financial Management, European Financial Management Association, vol. 18(2), pages 240-270, March.

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