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Do managers intentionally use repurchase tender offers to signal private information? Evidence from firm financial reporting behavior

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  • Louis, Henock
  • White, Hal
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Financial Economics.

    Volume (Year): 85 (2007)
    Issue (Month): 1 (July)
    Pages: 205-233

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    Handle: RePEc:eee:jfinec:v:85:y:2007:i:1:p:205-233

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    Web page: http://www.elsevier.com/locate/inca/505576

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    References

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    1. Fama, Eugene F., 1998. "Market efficiency, long-term returns, and behavioral finance," Journal of Financial Economics, Elsevier, Elsevier, vol. 49(3), pages 283-306, September.
    2. Vermaelen, Theo, 1981. "Common stock repurchases and market signalling : An empirical study," Journal of Financial Economics, Elsevier, Elsevier, vol. 9(2), pages 139-183, June.
    3. Kothari, S.P. & Leone, Andrew J. & Wasley, Charles E., 2005. "Performance matched discretionary accrual measures," Journal of Accounting and Economics, Elsevier, vol. 39(1), pages 163-197, February.
    4. Louis, Henock, 2004. "Earnings management and the market performance of acquiring firms," Journal of Financial Economics, Elsevier, Elsevier, vol. 74(1), pages 121-148, October.
    5. Louis, Henock & Robinson, Dahlia, 2005. "Do managers credibly use accruals to signal private information? Evidence from the pricing of discretionary accruals around stock splits," Journal of Accounting and Economics, Elsevier, vol. 39(2), pages 361-380, June.
    6. Gerald D. Gay & Jayant R. Kale & Thomas H. Noe, 1991. "Share Repurchase Mechanisms: A Comparative Analysis of Efficacy, Shareholder Wealth, and Corporate Control Effects," Financial Management, Financial Management Association, Financial Management Association, vol. 20(1), Spring.
    7. John R. Nofsinger & Richard W. Sias, 1999. "Herding and Feedback Trading by Institutional and Individual Investors," Journal of Finance, American Finance Association, vol. 54(6), pages 2263-2295, December.
    8. John D. Lyon & Brad M. Barber & Chih-Ling Tsai, 1999. "Improved Methods for Tests of Long-Run Abnormal Stock Returns," Journal of Finance, American Finance Association, vol. 54(1), pages 165-201, 02.
    9. Gustavo Grullon & David L. Ikenberry, 2000. "What Do We Know About Stock Repurchases?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 13(1), pages 31-51.
    10. Brennan, Michael J & Thakor, Anjan V, 1990. " Shareholder Preferences and Dividend Policy," Journal of Finance, American Finance Association, vol. 45(4), pages 993-1018, September.
    11. Perry, Susan E. & Williams, Thomas H., 1994. "Earnings management preceding management buyout offers," Journal of Accounting and Economics, Elsevier, vol. 18(2), pages 157-179, September.
    12. Russ Wermers, 1999. "Mutual Fund Herding and the Impact on Stock Prices," Journal of Finance, American Finance Association, vol. 54(2), pages 581-622, 04.
    13. Carhart, Mark M, 1997. " On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    14. Brav, Alon & Graham, John R. & Harvey, Campbell R. & Michaely, Roni, 2005. "Payout policy in the 21st century," Journal of Financial Economics, Elsevier, Elsevier, vol. 77(3), pages 483-527, September.
    15. Fama, Eugene F & MacBeth, James D, 1973. "Risk, Return, and Equilibrium: Empirical Tests," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(3), pages 607-36, May-June.
    16. Klein, April, 2002. "Audit committee, board of director characteristics, and earnings management," Journal of Accounting and Economics, Elsevier, vol. 33(3), pages 375-400, August.
    17. Vermaelen, Theo, 1984. "Repurchase Tender Offers, Signaling, and Managerial Incentives," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 19(02), pages 163-181, June.
    18. P. Raghavendra Rau & Theo Vermaelen, 2002. "Regulation, Taxes, and Share Repurchases in the United Kingdom," The Journal of Business, University of Chicago Press, vol. 75(2), pages 245-282, April.
    19. Persons, John C, 1994. " Signaling and Takeover Deterrence with Stock Repurchases: Dutch Auctions versus Fixed Price Tender Offers," Journal of Finance, American Finance Association, vol. 49(4), pages 1373-1402, September.
    20. Cowan, Arnold R. & Sergeant, Anne M. A., 2001. "Interacting biases, non-normal return distributions and the performance of tests for long-horizon event studies," Journal of Banking & Finance, Elsevier, vol. 25(4), pages 741-765, April.
    21. Lakonishok, Josef & Vermaelen, Theo, 1990. " Anomalous Price Behavior around Repurchase Tender Offers," Journal of Finance, American Finance Association, vol. 45(2), pages 455-77, June.
    22. William F. Maxwell & Clifford P. Stephens, 2003. "The Wealth Effects of Repurchases on Bondholders," Journal of Finance, American Finance Association, vol. 58(2), pages 895-920, 04.
    23. Gustavo Grullon & Roni Michaely, 2004. "The Information Content of Share Repurchase Programs," Journal of Finance, American Finance Association, vol. 59(2), pages 651-680, 04.
    24. Dittmar, Amy K, 2000. "Why Do Firms Repurchase Stock?," The Journal of Business, University of Chicago Press, vol. 73(3), pages 331-55, July.
    25. Dann, Larry Y. & Masulis, Ronald W. & Mayers, David, 1991. "Repurchase tender offers and earnings information," Journal of Accounting and Economics, Elsevier, vol. 14(3), pages 217-251, September.
    26. DeFond, Mark L. & Jiambalvo, James, 1994. "Debt covenant violation and manipulation of accruals," Journal of Accounting and Economics, Elsevier, vol. 17(1-2), pages 145-176, January.
    27. Lee, D Scott & Mikkelson, Wayne H & Partch, M Megan, 1992. " Managers' Trading around Stock Repurchases," Journal of Finance, American Finance Association, vol. 47(5), pages 1947-61, December.
    28. Fried, Jesse M, 2000. "Insider Signaling and Insider Trading with Repurchase Tender Offers," Berkeley Olin Program in Law & Economics, Working Paper Series, Berkeley Olin Program in Law & Economics qt74m8n14z, Berkeley Olin Program in Law & Economics.
    29. Teoh, Siew Hong & Welch, Ivo & Wong, T. J., 1998. "Earnings management and the underperformance of seasoned equity offerings," Journal of Financial Economics, Elsevier, Elsevier, vol. 50(1), pages 63-99, October.
    30. Persons, John C., 1997. "Heterogeneous shareholders and signaling with share repurchases," Journal of Corporate Finance, Elsevier, vol. 3(3), pages 221-249, June.
    31. David J. Denis & Diane K. Denis, 1993. "Leveraged Recaps And The Curbing Of Corporate Overinvestment," Journal of Applied Corporate Finance, Morgan Stanley, vol. 6(1), pages 60-71.
    32. Dann, Larry Y., 1981. "Common stock repurchases : An analysis of returns to bondholders and stockholders," Journal of Financial Economics, Elsevier, Elsevier, vol. 9(2), pages 113-138, June.
    33. Skinner, Douglas J., 1997. "Earnings disclosures and stockholder lawsuits," Journal of Accounting and Economics, Elsevier, vol. 23(3), pages 249-282, November.
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    Cited by:
    1. Bonaimé, Alice Adams & Öztekin, Özde & Warr, Richard S., 2014. "Capital structure, equity mispricing, and stock repurchases," Journal of Corporate Finance, Elsevier, vol. 26(C), pages 182-200.
    2. Salim Chahine & Mohamad Zeidan & Hala Dairy, 2012. "Corporate governance and the market reaction to stock repurchase announcement," Journal of Management and Governance, Springer, vol. 16(4), pages 707-726, November.
    3. Ken Yook & Partha Gangopadhyay, 2011. "A comprehensive examination of the wealth effects of recent stock repurchase announcements," Review of Quantitative Finance and Accounting, Springer, vol. 37(4), pages 509-529, November.
    4. Johnston, Rick & Leone, Andrew J. & Ramnath, Sundaresh & Yang, Ya-wen, 2012. "14-Week quarters," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 271-289.
    5. Yook, Ken C., 2010. "Long-run stock performance following stock repurchases," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 50(3), pages 323-331, August.
    6. Chang, Saeyoung & Puthenpurackal, John, 2014. "Repurchases of convertible preferred stock and shareholder wealth," Journal of Business Research, Elsevier, vol. 67(4), pages 623-630.
    7. Lee, Gemma & Masulis, Ronald W., 2011. "Do more reputable financial institutions reduce earnings management by IPO issuers?," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 982-1000, September.
    8. Lazonick, William, 2012. "Financialization of the U.S. corporation: what has been lost, and how it can be regained," MPRA Paper 42307, University Library of Munich, Germany, revised 29 Oct 2012.
    9. Lee, Bong Soo & Mauck, Nathan, 2014. "Information Asymmetry and the Market Response to Open Market Share Repurchases," MPRA Paper 54066, University Library of Munich, Germany.
    10. Jun, Sang-gyung & Jung, Mookwon & Walkling, Ralph A., 2009. "Share repurchase, executive options and wealth changes to stockholders and bondholders," Journal of Corporate Finance, Elsevier, vol. 15(2), pages 212-229, April.
    11. de Jong, Abe & Dutordoir, Marie & Verwijmeren, Patrick, 2011. "Why do convertible issuers simultaneously repurchase stock? An arbitrage-based explanation," Journal of Financial Economics, Elsevier, Elsevier, vol. 100(1), pages 113-129, April.
    12. Andriosopoulos, Dimitris & Hoque, Hafiz, 2013. "The determinants of share repurchases in Europe," International Review of Financial Analysis, Elsevier, vol. 27(C), pages 65-76.
    13. Hung, Weifeng, 2014. "Institutional trading and attention bias," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 29(C), pages 71-91.

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