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Share repurchase regulations: do firms play by the rules?

  • Hamon, Jacques
  • Ginglinger, Edith

Open market share repurchases are strictly regulated to prevent companies from profiting from insider information. We examine compliance with these rules in France, where the mandatory disclosure of share repurchases provides detailed information on repurchases actually undertaken. Using a database containing 36,848 repurchases made by 352 French firms over the period 2000-2002, we show that very few firms fully comply with the regulations for all their buybacks. Non-compliance has an adverse effect on liquidity only for the smallest and least liquid firms.

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Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/1435.

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Date of creation: Jun 2009
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Publication status: Published in International Review of Law and Economics, 2009, Vol. 29, no. 2. pp. 81-96.Length: 15 pages
Handle: RePEc:dau:papers:123456789/1435
Contact details of provider: Web page: http://www.dauphine.fr/en/welcome.html

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  1. Ginglinger, Edith & L'Her, Jean-François, 2006. "Ownership structure and open market stock repurchases in France," Economics Papers from University Paris Dauphine 123456789/399, Paris Dauphine University.
  2. David Ikenberry & Josef Lakonishok & Theo Vermaelen, 2000. "Stock Repurchases in Canada: Performance and Strategic Trading," Journal of Finance, American Finance Association, vol. 55(5), pages 2373-2397, October.
  3. Ginglinger, Edith & Hamon, Jacques, 2007. "Actual share repurchases, timing and liquidity," Journal of Banking & Finance, Elsevier, vol. 31(3), pages 915-938, March.
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  12. William J. Mcnally & Brian F. Smith, 2003. "Do Insiders Play by the Rules?," Canadian Public Policy, University of Toronto Press, vol. 29(2), pages 125-143, June.
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  15. Utpal Bhattacharya & Hazem Daouk, 2002. "The World Price of Insider Trading," Journal of Finance, American Finance Association, vol. 57(1), pages 75-108, 02.
  16. Lakonishok, Josef & Lee, Inmoo, 2001. "Are Insider Trades Informative?," Review of Financial Studies, Society for Financial Studies, vol. 14(1), pages 79-111.
  17. Zhang, Hua, 2005. "Share price performance following actual share repurchases," Journal of Banking & Finance, Elsevier, vol. 29(7), pages 1887-1901, July.
  18. Seyhun, H. Nejat, 1986. "Insiders' profits, costs of trading, and market efficiency," Journal of Financial Economics, Elsevier, vol. 16(2), pages 189-212, June.
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