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The Stock Market Reaction to Significant Tender Offer Repurchases of Stock: Size and Purpose Perspective

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  • Davidson, Wallace N, III
  • Garrison, Sharon H

Abstract

This paper uses event methodology to examine the impact of common stock repurchases on the repurchasing firm's common stock returns, including examination of various subsamples to test the effects of size and purpose of repurchase. Although the market reacts positively to general repurchase announcements, it reacts negatively to those repurchases used to fend off takeover attempts and does not react at all to stock repurchases for employee stock option plan purposes. Copyright 1989 by MIT Press.

Suggested Citation

  • Davidson, Wallace N, III & Garrison, Sharon H, 1989. "The Stock Market Reaction to Significant Tender Offer Repurchases of Stock: Size and Purpose Perspective," The Financial Review, Eastern Finance Association, vol. 24(1), pages 93-107, February.
    • Handle: RePEc:bla:finrev:v:24:y:1989:i:1:p:93-107
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    Cited by:

    1. Tung Liang Liao & Mei-Chu Ke & Hsiang-Tai Yu, 2005. "Anomalous price behaviour around stock repurchases on the Taiwan stock exchange," Applied Economics Letters, Taylor & Francis Journals, vol. 12(1), pages 29-39.
    2. Andreas Hackethal & Alexandre Zdantchouk, 2006. "Signaling Power of Open Market Share Repurchases in Germany," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 20(2), pages 123-151, June.
    3. Guragai, Binod, 2022. "Market response to stock exchange listing deficiency notices: Evidence from Nasdaq," Advances in accounting, Elsevier, vol. 59(C).
    4. Chanchal Chatterjee & Paromita Dutta, 2015. "Anomalous Price Behaviour around Open Market Stock Repurchase Announcements in India," Vikalpa: The Journal for Decision Makers, , vol. 40(4), pages 435-443, December.

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