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The information content of open-market repurchase announcements in Taiwan

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  • Cheng, Su-Yin
  • Hou, Han

Abstract

Utilizing information disclosures of open-market repurchases in Taiwan, this paper investigates two topics. The first is the association between corresponding announcing information and market responses. The results show that intention ratio is positively correlated with two-day announcement effect and the market responses of the entire execution period. However, the positive relationship is insignificant one month after the termination of the programs. The findings also reveal that price location is significantly negative when related to market responses of the overall execution period, and that such a relationship can last longer. Second, while proxy for undervaluation is properly considered, our findings suggest that the interaction between price location and market responses resulted from a higher premium rather than undervaluation, indicating that price location sends a signal of premium.

Suggested Citation

  • Cheng, Su-Yin & Hou, Han, 2013. "The information content of open-market repurchase announcements in Taiwan," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 27(C), pages 59-75.
  • Handle: RePEc:eee:intfin:v:27:y:2013:i:c:p:59-75
    DOI: 10.1016/j.intfin.2013.07.010
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    References listed on IDEAS

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    Keywords

    Open-market repurchases; CARs; Announcement information; Premium; Event study;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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