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Market Overreaction to Bad News and Share Repurchase: Evidence from Japan


  • SHIRABE, Yuji
  • 調, 勇二


We examine the relationship between the market reaction to management earnings forecasts and subsequent share repurchase announcements. Our results show that repurchase firms experience a larger market reaction to bad news of management earnings forecasts than non-repurchase firms before repurchase announcements. By contrast, there is little difference in the market reaction to good news between repurchase firms and non-repurchase firms. Additionally, little difference exists in the information content of management forecasts between repurchase firms and non-repurchase firms. In summary, our results imply that Japanese companies announce share repurchases in response to market overreactions to bad news in management earnings forecasts.

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  • SHIRABE, Yuji & 調, 勇二, 2017. "Market Overreaction to Bad News and Share Repurchase: Evidence from Japan," Working Paper Series 215, Management Innovation Research Center, School of Business Administration, Hitotsubashi University Business School.
  • Handle: RePEc:hit:hmicwp:215

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