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Patriotic Stock Repurchases: The Two Weeks Following the 9-11 Attack

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  • Gu, Anthony Yanxiang
  • Schinski, Michael

Abstract

The September 11, 2001 terrorist attacks created a unique situation where patriotism became a significant motive for companies to make stock buyback announcements. Officials from the stock markets and the SEC encouraged stock repurchase announcements to help stabilize the markets. However, some analysts questioned the wisdom of repurchase announcements at this time of economic uncertainty, given that buybacks reduce the firm's cash and equity. This study finds that announcements made during the two weeks following the attacks had a positive effect on a firm's stock price. It was also found that the earlier the announcement following the attacks, generally the more positive the market response. This suggests the possibility of a "patriotism effect" where the firms most eager to show their patriotism were rewarded by patriotic investors. Copyright 2003 by Kluwer Academic Publishers

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  • Gu, Anthony Yanxiang & Schinski, Michael, 2003. "Patriotic Stock Repurchases: The Two Weeks Following the 9-11 Attack," Review of Quantitative Finance and Accounting, Springer, vol. 20(3), pages 267-276, May.
    • Handle: RePEc:kap:rqfnac:v:20:y:2003:i:3:p:267-76
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    Cited by:

    1. Ran Lu-Andrews & John L. Glascock, 2017. "Liquidity, Price Behavior, and Market-related Events," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(2), pages 318-351, March.
    2. Dimitris Andriosopoulos & Chrysovalantis Gaganis & Fotios Pasiouras, 2016. "Prediction of open market share repurchases and portfolio returns: evidence from France, Germany and the UK," Review of Quantitative Finance and Accounting, Springer, vol. 46(2), pages 387-416, February.

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