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Long-run stock performance following stock repurchases

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  • Yook, Ken C.
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    Abstract

    Studies examining long-term performance after stock repurchases provide mixed results. I point out two substantive problems in samplings of early studies. First, we should distinguish whether or not firms actually repurchase shares following announcements of repurchase programs. Second, as some firms frequently announce repurchase programs, we should consider overlapping announcements during the performance estimation period to avoid any confounding effects. Using a sample that corrects for these problems and the calendar portfolio regression method, I find strong evidence that firms that announce repurchase programs infrequently and repurchase shares actually experience significant long-term abnormal returns. These findings provide an explanation of why some previous studies failed to find significant positive long-term performance.

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    Bibliographic Info

    Article provided by Elsevier in its journal The Quarterly Review of Economics and Finance.

    Volume (Year): 50 (2010)
    Issue (Month): 3 (August)
    Pages: 323-331

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    Handle: RePEc:eee:quaeco:v:50:y:2010:i:3:p:323-331

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    Web page: http://www.elsevier.com/locate/inca/620167

    Related research

    Keywords: Stock repurchase program Long-run stock return Underreaction;

    References

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    Cited by:
    1. Kimberly Gleason & Anita Pennathur & Joan Wiggenhorn, 2014. "Acquisitions of family owned firms: boon or bust?," Journal of Economics and Finance, Springer, vol. 38(2), pages 269-286, April.
    2. 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.

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