The Effects of Ownership and Stock Liquidity on the Timing of Repurchase Transactions
Amedeo De Cesari
Aston University - Aston Business School - Finance & Accounting Group
University of Manchester - Manchester Business School
University of Manchester - Manchester Business School, Division of Accounting Finance
Seton Hall Law School; Harvard Law School - John M. Olin Center for Law and Economics
Journal of Corporate Finance, Vol. 18, 2012
We construct a novel dataset of detailed monthly data on U.S. open market stock repurchases (OMRs) that became available following stricter SEC disclosure requirements in 2004. The data allow us to investigate the timing of OMRs. We find evidence that OMRs are timed to benefit non-selling shareholders. Our analysis identifies ownership and liquidity as significant determinants of timing gains: stock liquidity increases and institutional ownership decreases timing gains, while the relation between timing and insider ownership is inverse U-shaped. These findings suggest the need for more timely and detailed OMR disclosure particularly for relatively liquid stocks with low institutional ownership and intermediate levels of inside ownership.
Number of Pages in PDF File: 59
Keywords: Open market repurchase, timing, ownership, liquidity
JEL Classification: G35, G38Accepted Paper Series
Date posted: July 1, 2011 ; Last revised: August 26, 2012
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