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The effects of ownership and stock liquidity on the timing of repurchase transactions

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Author Info

  • De Cesari, Amedeo
  • Espenlaub, Susanne
  • Khurshed, Arif
  • Simkovic, Michael

Abstract

We analyze detailed monthly data on U.S. open market stock repurchases (OMRs) that recently became available following stricter disclosure requirements. We find evidence that OMRs are timed to benefit non-selling shareholders. We present evidence that the profits to companies from timing repurchases are significantly related to ownership structure. Institutional ownership reduces companies' opportunities to repurchase stock at bargain prices. At low levels, insider ownership increases timing profits and at high levels it reduces them. Stock liquidity increases profits from timing OMRs.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Corporate Finance.

Volume (Year): 18 (2012)
Issue (Month): 5 ()
Pages: 1023-1050

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Handle: RePEc:eee:corfin:v:18:y:2012:i:5:p:1023-1050

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Web page: http://www.elsevier.com/locate/jcorpfin

Related research

Keywords: Open market repurchase; Timing; Ownership; Liquidity;

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References

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Cited by:
  1. Boudry, Walter I. & Kallberg, Jarl G. & Liu, Crocker H., 2013. "Investment opportunities and share repurchases," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 23-38.
  2. Agarwalla, Sobhesh Kumar & Jacob, Joshy & Vasudevan, Ellapulli, . "Market Timing Ability of Indian Firms in Open Market Repurchases," IIMA Working Papers WP2013-11-10, Indian Institute of Management Ahmedabad, Research and Publication Department.
  3. Hossein Rezaie Dolatabadi & Fatemeh Faghani & Seyed Mehdi Tabatabaee, 2013. "Impact of Information Technology Development on Stock Market Development. Empirical Study in the World’s Leading Capital Markets," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(1), pages 382-390, January.
  4. Andriosopoulos, Dimitris & Hoque, Hafiz, 2013. "The determinants of share repurchases in Europe," International Review of Financial Analysis, Elsevier, vol. 27(C), pages 65-76.

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