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The impact of open market equity repurchases on UK equity prices

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  • William Rees
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    Abstract

    This paper presents the first empirical evidence regarding the share price impact of open market stock repurchases in the UK. The analysis reveals a positive reaction on the day of the announcement of the repurchase, consistent with the reaction found under very different circumstances in the US, and consistent with the expected reaction on the retirement of equity. The transactions are typically instigated by firms that are underperforming the market and tends to follow a short-term fall in the firm's share price. The reaction on the day of the repurchase is positively related to the percentage of equity transacted. There is no evidence that the return on the day of the announcement is affected by the characteristics of the repurchase.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/13518479600000014
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal The European Journal of Finance.

    Volume (Year): 2 (1996)
    Issue (Month): 4 ()
    Pages: 353-370

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    Handle: RePEc:taf:eurjfi:v:2:y:1996:i:4:p:353-370

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    Web page: http://www.tandfonline.com/REJF20

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    Related research

    Keywords: G14 information and market efficiency; event studies; G32 financing policy: capital and ownership structure;

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    Cited by:
    1. Carol Padgett & Zhiqi Wang, . "Short-Term Returns of UK Share Buyback Activity," ICMA Centre Discussion Papers in Finance icma-dp2007-10, Henley Business School, Reading University.
    2. Michael Firth & T. Y. Leung & Oliver M. Rui, 2008. "Double Signals or Single Signal? An Investigation of Insider Trading Around Share Repurchases," Working Papers 222008, Hong Kong Institute for Monetary Research.

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