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EU regulation and open market share repurchases: New evidence

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  • Drousia, Angeliki
  • Episcopos, Athanasios
  • Leledakis, George N.
  • Pyrgiotakis, Emmanuil

Abstract

This paper re-examines the impact of the EU Market Abuse Directive (MAD) on the market reaction around share repurchase announcements. We use a unique hand-collected dataset of firms listed on the Athens Stock Exchange, and we find evidence that contrasts with previous conclusions for large European economies. The implementation of MAD is followed by a significant improvement in announcement abnormal returns, an improvement which remains even when we control for several firm-specific factors, industry fixed effects, and potential endogeneity issues. We attribute our findings to cross-country differences in institutional framework and pre-MAD existing national laws. Collectively, our results support the notion that EU directives do not have a uniform effect across Member States. Thus, the impact of such reforms should also be examined in individual capital market studies.

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  • Drousia, Angeliki & Episcopos, Athanasios & Leledakis, George N. & Pyrgiotakis, Emmanuil, 2020. "EU regulation and open market share repurchases: New evidence," MPRA Paper 102023, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:102023
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    More about this item

    Keywords

    Share repurchases; Market Abuse Directive; safe harbor; signaling undervaluation.;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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