Abstract

http://ssrn.com/abstract=1608402
 
 

References (17)



 


 



Is the Market Underreacting or Overreacting to Open Market Share Repurchases? A UK Perspective


Ian Peter Crawford


School of Management, University of Bath

Zhiqi Wang


Birkbeck, University of London

May 15, 2010


Abstract:     
Using UK open market repurchases, we reject the market underreaction hypothesis and the market overreaction hypothesis proposed by (Ikenberry, Lakonishok and Vermaelen 1995) and (Peyer and Vermaelen 2009), respectively. The evidence supports that the UK market reacts slowly to actual repurchases made by value firms. UK repurchases on average do not suffer from share undervaluation prior to the announcement. Value firms perform just as well as glamour firms during the authorisation period but outperform glamour firms significantly two years following the announcement. It turns out that value firms repurchase over 6% more shares than glamour firms during the authorisation period.

Keywords: Open Market Share Repurchases, Market Underreaction or Overreaction, Long Run Abnormal Returns

JEL Classification: G14, G35

working papers series


Not Available For Download

Date posted: March 28, 2011  

Suggested Citation

Crawford , Ian Peter and Wang, Zhiqi, Is the Market Underreacting or Overreacting to Open Market Share Repurchases? A UK Perspective (May 15, 2010). Available at SSRN: http://ssrn.com/abstract=1608402

Contact Information

Ian Peter Crawford
School of Management, University of Bath ( email )
University of Bath
Bath
Bath, BA2 7AY
United Kingdom
Zhiqi Wang (Contact Author)
Birkbeck, University of London ( email )
Malet Street
Bloomsbury
London, WC1E 7HX
United Kingdom
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