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

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  • 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.

Suggested Citation

  • De Cesari, Amedeo & Espenlaub, Susanne & Khurshed, Arif & Simkovic, Michael, 2012. "The effects of ownership and stock liquidity on the timing of repurchase transactions," Journal of Corporate Finance, Elsevier, vol. 18(5), pages 1023-1050.
    • Handle: RePEc:eee:corfin:v:18:y:2012:i:5:p:1023-1050
    DOI: 10.1016/j.jcorpfin.2012.06.004
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    More about this item

    Keywords

    Open market repurchase; Timing; Ownership; Liquidity;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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