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On The Timing Of Initial Stock Repurchases

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Author Info
Luís Krug Pacheco () (Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto))
Clara Raposo () (ICSTE, Business School)
Abstract

In this paper, we study the timing of initial stock repurchases for a sample of firms from their IPO onwards, using panel adjusted logistic regressions and hazard models to examine which variables may predict and theoretical hypotheses may explain these transactions. First, we find that initial repurchases (in comparison with non-repurchase firms) seem to have similar financial characteristics of dividend initiators (relative to matched dividend postpone firms), as reported by Kale et al., (2006) and Bulan et al., (2006). Second, our empirical findings in the two multivariate empirical approaches used are particularly consistent with the timing and undervaluation signaling hypotheses in explaining the timing of stock repurchases, consistent with the results of Jagannathan and Stephens (2003) for the likelihood of less frequent stock repurchases. We also offer some support for the risk reduction signaling, free cash flow and maturity hypotheses for initial repurchase firms which are also dividend payers.

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Publisher Info
Paper provided by Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto) in its series Documentos de Trabalho em Gestão (Working Papers in Management) with number 06.

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Length: 53 pages
Date of creation: Feb 2009
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Handle: RePEc:cap:mpaper:062009

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Related research
Keywords: Stock Repurchases; Initial Stock Repurchases; Timing of Initial Repurchases; Payout Policy.;

Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  13. Laurie Simon Bagwell & John B. Shoven, 1988. "Share Repurchases and Acquisitions: An Analysis of Which Firms Participate," NBER Chapters, in: Corporate Takeovers: Causes and Consequences, pages 191-220 National Bureau of Economic Research, Inc. [Downloadable!]
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    Other versions:
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