Share Repurchase Regulations: Do Firms Play by the Rules?
40 Pages Posted: 1 Aug 2008 Last revised: 17 Jun 2015
Date Written: July 30, 2008
Open market share repurchases are strictly regulated to prevent managers from taking advantage of selling shareholders. We examine compliance with these rules in France, where the mandatory disclosure of share repurchases provides detailed information on repurchases actually undertaken. Using a database containing 36,848 repurchases made by 352 French firms over the period 2000-2002, we show that very few firms fully comply with the regulations for all their buybacks. We document that illegal repurchases before earnings announcements are the most detrimental to selling shareholders.
Keywords: open market share repurchases, insider trading, regulation, liquidity
JEL Classification: K22, G18, G35
Suggested Citation: Suggested Citation