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Share repurchase regulations: do firms play by the rules?

Author

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  • Edith Ginglinger

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Jacques Hamon

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

Open market share repurchases are strictly regulated to prevent companies from profiting from insider information. We examine compliance with these rules in France, where the mandatory disclosure of share repurchases provides detailed information on repurchases actually undertaken. Using a database containing 36,848 repurchases made by 352 French firms over the period 2000-2002, we show that very few firms fully comply with the regulations for all their buybacks. Non-compliance has an adverse effect on liquidity only for the smallest and least liquid firms.

Suggested Citation

  • Edith Ginglinger & Jacques Hamon, 2009. "Share repurchase regulations: do firms play by the rules?," Post-Print halshs-00143974, HAL.
    • Handle: RePEc:hal:journl:halshs-00143974
    DOI: 10.1016/j.irle.2008.12.002
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00143974
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    References listed on IDEAS

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    Cited by:

    1. Chen, Ni-Yun & Liu, Chi-Chun, 2021. "The effect of repurchase regulations on actual share reacquisitions and cost of debt," The North American Journal of Economics and Finance, Elsevier, vol. 55(C).
    2. Mustafa Erdem Sakinç, 2017. "Share Repurchases in Europe A Value Extraction Analysis," CEPN Working Papers hal-03987909, HAL.
    3. Mustafa Erdem Sakinç, 2017. "Share Repurchases in Europe A Value Extraction Analysis," Working Papers hal-03987909, HAL.
    4. Chen, Ni-Yun & Liu, Chi-Chun, 2019. "Open-market block share repurchases probability, frequency and timing," Pacific-Basin Finance Journal, Elsevier, vol. 53(C), pages 278-296.
    5. David, Thomas & Ginglinger, Edith, 2016. "When cutting dividends is not bad news: The case of optional stock dividends," Journal of Corporate Finance, Elsevier, vol. 40(C), pages 174-191.
    6. Patrice Charlier & Céline Du Boys, 2009. "Gouvernance Familiale Et Repartition De La Valeur : Etude Des Politiques De Distribution Aux Actionnaires Des Entreprises Familiales Cotees," Post-Print halshs-00455729, HAL.
    7. Foued Hamouda & Mounira Ben Arab, 2013. "Board of directors and insider trading with share repurchase programs," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 405-418, May.

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    Keywords

    open market share repurchases; insider trading; regulations; liquidity;
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