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http://ssrn.com/abstract=1738922
 
 

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Do Firms Buy Their Stock at Bargain Prices? Evidence from Actual Stock Repurchase Disclosures


Azi Ben-Rephael


Indiana University - Kelley School of Business - Department of Finance

Jacob Oded


Tel Aviv University - Faculty of Management

Avi Wohl


Tel Aviv University - Faculty of Management

June 5, 2013

Forthcoming in Review of Finance

Abstract:     
Using new monthly data we investigate open-market repurchase executions of US firms. We find that firms repurchase at prices which are significantly lower than average market prices. This price discount is negatively related to size and positively related to market-to-book ratio. Firms’ repurchase activity is followed by a positive and significant abnormal return. Importantly, the market response occurs when firms disclose their actual repurchase data in earnings announcements, and this positive response is followed by a one month drift. Consistent with these results, we find that insider trading is positively related to actual repurchases.

Number of Pages in PDF File: 59

Keywords: Stock Repurchases, Stock Buybacks, Payout Policy, Timing, Bid-Ask Spread, Liquidity, Insider Trading

JEL Classification: G14, G38, G35

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Date posted: January 15, 2011 ; Last revised: June 5, 2013

Suggested Citation

Ben-Rephael, Azi and Oded, Jacob and Wohl, Avi, Do Firms Buy Their Stock at Bargain Prices? Evidence from Actual Stock Repurchase Disclosures (June 5, 2013). Forthcoming in Review of Finance. Available at SSRN: http://ssrn.com/abstract=1738922 or http://dx.doi.org/10.2139/ssrn.1738922

Contact Information

Azi Ben-Rephael
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
HOME PAGE: http://www.kelley.iu.edu/finance/

Jacob Oded (Contact Author)
Tel Aviv University - Faculty of Management ( email )
Ramat Aviv
Tel-Aviv, 6997801
Israel
Avi Wohl
Tel Aviv University - Faculty of Management ( email )
P.O. Box 39010
Ramat Aviv, Tel Aviv, 69978
Israel
+972 3 6409051 (Phone)
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