The Effects of Ownership and Stock Liquidity on the Timing of Repurchase Transactions
Amedeo De Cesari
University of Manchester - Manchester 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; Fordham University School of Law; Harvard Law School - John M. Olin Center for Law and Economics
June 6, 2012
We analyze detailed monthly data on U.S. open market stock repurchases (OMRs) that recently became available following stricter disclosure requirements. We find evidence that OMRs are timed to benefit non-selling shareholders. We present evidence that the profits to companies from timing repurchases are significantly related to ownership structure. Institutional ownership reduces companies’ opportunities to repurchase stock at bargain prices. At low levels, insider ownership increases timing profits and at high levels it reduces them. Stock liquidity increases profits from timing OMRs.
Number of Pages in PDF File: 59
Keywords: open market repurchase, timing, ownership, liquidity
JEL Classification: G35, G38
Date posted: July 12, 2011 ; Last revised: August 26, 2012
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