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Institutional investment horizons and open-market stock repurchases: evidence from the Taiwan stock market

  • Lee-Young Cheng
  • Yu-En Lin
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    This article investigates how the investment horizon of a firm's institutional shareholders affects the outcome of stock repurchase. Our results show that repurchasing firms with long-term institutional investors experience significantly positive abnormal returns around the repurchasing announcements, actually buy back more shares during the execution period, and perform better over a subsequent 3-year period than repurchasing firms with short-term institutional investors. These findings suggest that repurchasing firms held by long-term institutional investors can acquire certification- and monitoring-related benefits, thus providing more credible signals about the true value of firms.

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    File URL: http://hdl.handle.net/10.1080/09603107.2011.621878
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    Article provided by Taylor & Francis Journals in its journal Applied Financial Economics.

    Volume (Year): 22 (2012)
    Issue (Month): 8 (April)
    Pages: 611-623

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    Handle: RePEc:taf:apfiec:v:22:y:2012:i:8:p:611-623
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