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Does prior record matter in the wealth effect of open-market share repurchase announcements?

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Listed author(s):
  • Chang, Shao-Chi
  • Chen, Sheng-Syan
  • Chen, Li-Yu
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    Abstract

    This study investigates whether prior experience of share repurchases matters in the market reactions to the subsequent repurchase announcements. Specifically, we study the prior record on actual buybacks and post-announcement stock performance. We find that upon the announcement of share repurchases, stock markets not only respond more positively to those made by firms that have better record on actual buyback following their previous repurchase plan announcements, but also experience a stronger reaction for announcing firms with better stock performance after prior repurchase announcements. These results hold even after controlling for other variables that are found important in influencing the market reactions to repurchase announcements.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1059-0560(09)00120-8
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    Article provided by Elsevier in its journal International Review of Economics & Finance.

    Volume (Year): 19 (2010)
    Issue (Month): 3 (June)
    Pages: 427-435

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    Handle: RePEc:eee:reveco:v:19:y:2010:i:3:p:427-435
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

    Keywords: Share repurchase Record on actual buyback Stock performance;

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    Cited by:

    1. Lai, Jung-Ho & Chen, Li-Yu, 2014. "The valuation effect of corporate governance on stakeholder wealth: Evidence from strategic alliances," International Review of Economics & Finance, Elsevier, vol. 32(C), pages 117-131.
    2. Chen, Yea-Mow & Huang, Ying Sophie & Wang, David K. & Wu, Chun-Chou, 2014. "Going private transactions by U.S.-Listed Chinese companies: What drives the premiums paid?," International Review of Economics & Finance, Elsevier, vol. 32(C), pages 79-91.
    3. Wang, Li-Hsun & Lin, Chu-Hsiung & Fung, Hung-Gay & Chen, Hsien-Ming, 2013. "An analysis of stock repurchase in Taiwan," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 497-513.
    4. Chang, Chih-Hsiang & Chan, Kam C., 2011. "Investment banks' stock ratings, call warrant issuance, and responses from heterogeneous investors: Evidence from Taiwan," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 733-743, October.

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