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Market Reaction to Actual Daily Share Repurchases in Greece

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

Abstract

The stock market reaction around the announcement date of actual share repurchases, the factors that affect the size of that reaction, and the motives behind share acquisitions are examined. A unique, hand-collected dataset is used, including public announcements of companies traded on the Athens Stock Exchange. Consistent with the price support hypothesis, companies repurchase when their share price exhibits a declining trend, whereas the short-term market reaction is not statistically significant. Large firms and firms with low book-to-market ratio repurchase when their stock has underperformed the market. Small firms and firms with high book-to-market ratio repurchase even though their shares have not experienced abnormal declines. The market reacts more favorably to buybacks by small firms and firms with high book-to-market ratio. Long-term abnormal returns are higher for repurchasing firms compared to non-repurchasing controls, and depend positively on the frequency of repurchases and the stated reason for program authorization.

Suggested Citation

  • Drousia, Angeliki & Episcopos, Athanasios & Leledakis, George N., 2016. "Market Reaction to Actual Daily Share Repurchases in Greece," MPRA Paper 83039, University Library of Munich, Germany, revised 01 Aug 2017.
    • Handle: RePEc:pra:mprapa:83039
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    References listed on IDEAS

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    Cited by:

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    2. Angeliki Drousia & Athanasios Episcopos & George N. Leledakis & Emmanouil G. Pyrgiotakis, 2023. "EU Regulation and open market share repurchases: new evidence," The European Journal of Finance, Taylor & Francis Journals, vol. 29(9), pages 1022-1042, June.
    3. Wang, Zigan & Yin, Qie Ellie & Yu, Luping, 2021. "Real effects of share repurchases legalization on corporate behaviors," Journal of Financial Economics, Elsevier, vol. 140(1), pages 197-219.
    4. Alexandros Sikalidis & Konstantinos Bozos & Antonios Chantziaras & Christos Grose, 2022. "Influences of family ownership on dividend policy under mandatory dividend rules," Review of Quantitative Finance and Accounting, Springer, vol. 59(3), pages 939-967, October.
    5. Dimitrios Kenourgios & Spyros Papathanasiou & Anastasia Christina Bampili, 2022. "On the predictive power of CAPE or Shiller’s PE ratio: the case of the Greek stock market," Operational Research, Springer, vol. 22(4), pages 3747-3766, September.

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    More about this item

    Keywords

    Actual share repurchases; market reaction; firm characteristics; stated repurchase reasons; price support hypothesis;
    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

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