Abstract

http://ssrn.com/abstract=2024566
 
 

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Agency Implications of Equity Market Timing


Yuri Tserlukevich


Arizona State University (ASU)

Ilona Babenko


Arizona State University

Pengcheng Wan


Arizona State University (ASU) - Finance Department

Dec 29, 2012

AFA 2013 San Diego Meetings Paper

Abstract:     
We develop a rational expectations model to examine the conflicts of interest between different groups of shareholders in firms' market timing decisions. We show that current shareholders benefit from share repurchase timing, whereas future shareholders prefer issuance timing. Using a new empirical measure that captures the additional returns to shareholders from equity sales and stock repurchases, we document that managers of large firms time the market primarily through stock repurchases and are rewarded with higher compensation when they beat the market. In contrast, managers of small firms appear to cater more to future shareholders in their market timing decisions.

Number of Pages in PDF File: 52

Keywords: agency, market timing, repurchase

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Date posted: March 20, 2012 ; Last revised: December 30, 2012

Suggested Citation

Tserlukevich, Yuri and Babenko, Ilona and Wan, Pengcheng, Agency Implications of Equity Market Timing (Dec 29, 2012). AFA 2013 San Diego Meetings Paper. Available at SSRN: http://ssrn.com/abstract=2024566 or http://dx.doi.org/10.2139/ssrn.2024566

Contact Information

Yuri Tserlukevich (Contact Author)
Arizona State University (ASU) ( email )
Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States
Ilona Babenko
Arizona State University ( email )
Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States
Pengcheng Wan
Arizona State University (ASU) - Finance Department ( email )
W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States
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