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Closing the value gap by the means of stock repurchase announcement – the case of Warsaw Stock Exchange

Author

Listed:
  • Tomasz Slonski

    (Faculty of Management, Informatics and Finance, Wroclaw University of Economics, Poland)

  • Bartosz Zawadzki

    (Faculty of Management, Informatics and Finance, Wroclaw University of Economics, Poland)

Abstract

This article shows that announcement of share repurchase programs on Polish market is used as a price catalyst when the spread between intrinsic and market value is large. The article presents determinants, conditions and results of 77 open market share repurchase programs conducted on Warsaw Stock Exchange (WSE) between 2005 and 2010. We find the behaviour of management boards of companies listed on WSE consistent with the market timing theory assumptions, as in most cases managers passed the information to the market without any additional economic costs. Investors who adopted the strategy to invest in undervalued stocks and hold the securities for 6 months realized a total return of 61.15% in the analyzed period.

Suggested Citation

  • Tomasz Slonski & Bartosz Zawadzki, 2013. "Closing the value gap by the means of stock repurchase announcement – the case of Warsaw Stock Exchange," Business and Economic Horizons (BEH), Prague Development Center, vol. 9(3), pages 56-68, October.
    • Handle: RePEc:pdc:jrnbeh:v:9:y:2013:i:3:p:56-68
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    More about this item

    Keywords

    Share repurchase; event studies; market timing;
    All these keywords.

    JEL classification:

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

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