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Market Reaction to Stock Repurchases in Greece

Author

Listed:
  • Drousia, Angeliki
  • Episcopos, Athanasios
  • Leledakis, George N.

Abstract

This paper examines open market stock repurchases by Greek firms, using a unique dataset covering the period 2000-2010. Positive and statistically significant cumulative average abnormal returns are observed around the date of repurchase program authorizations. Investors react more to authorizations of initial programs than to subsequent programs. After the implementation of the EU Market Abuse Directive in Greece, investors react more favorably to buyback announcements. The reason for initiating a repurchase program, as stated by the companies, is directly related to the market valuation of the program. The paper identifies the characteristics of firms that announce dividend changes, given the decision to initiate a stock buyback. The regression results appear to support the hypothesis of signaling undervaluation.

Suggested Citation

  • Drousia, Angeliki & Episcopos, Athanasios & Leledakis, George N., 2016. "Market Reaction to Stock Repurchases in Greece," MPRA Paper 85610, University Library of Munich, Germany, revised 01 Mar 2018.
    • Handle: RePEc:pra:mprapa:85610
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    References listed on IDEAS

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    Cited by:

    1. Drousia, Angeliki & Episcopos, Athanasios & Leledakis, George N., 2019. "Market reaction to actual daily share repurchases in Greece," The Quarterly Review of Economics and Finance, Elsevier, vol. 74(C), pages 267-277.
    2. Dinis Santos & Paulo M. Gama, 2020. "How do different firms perform while trading own stock? A granular analysis on specific characteristics and market conditions," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 9(2), pages 71-93, December.

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    More about this item

    Keywords

    Share repurchases; regulation; repurchase motives; signaling undervaluation.;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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