The Market Valuation of Share Repurchases in Europe. A Cross Country Analysis

39 Pages Posted: 28 Jan 2009 Last revised: 17 Jan 2019

See all articles by Meziane Lasfer

Meziane Lasfer

Cass Business School, City, University of London

Dimitris Andriosopoulos

Strathclyde Business School

Date Written: February 1, 2011

Abstract

We analyse a uniquely constructed data set of share repurchases in France, Germany and the UK. We find significant differences across the three countries in the popularity of this strategy, in the market reaction and its determinants, and in the likelihood of subsequent share repurchase announcements. We show that in the UK, fundamental factors such as initial announcement, size, past returns, ownership concentration, and changes in regulations during our sample period explain the market reaction to the announcement of intention to repurchase shares. In the remaining countries, the excess returns are not persistent in the post-event period, and the fundamental factors do not consistently explain the market reaction and the probability of subsequent repurchases announcements. Our results suggest that institutional settings affect the value creation of share repurchases.

Keywords: Share repurchases, information asymmetry, undervaluation, ownership structure, regulatory frameworks

JEL Classification: G14, G15, G35

Suggested Citation

Lasfer, Meziane and Andriosopoulos, Dimitris, The Market Valuation of Share Repurchases in Europe. A Cross Country Analysis (February 1, 2011). Journal of Banking and Finance, Vol. 55, 2015. Available at SSRN: https://ssrn.com/abstract=1333687 or http://dx.doi.org/10.2139/ssrn.1333687

Meziane Lasfer

Cass Business School, City, University of London ( email )

106 Bunhill Row
London, EC1Y 8TZ
Great Britain
+44 20 7040 8634 (Phone)
+44 20 7040 8881 (Fax)

HOME PAGE: http://www.cass.city.ac.uk/faculty/m.a.lasfer/

Dimitris Andriosopoulos (Contact Author)

Strathclyde Business School ( email )

199 Cathedral Street
Department of Accounting and Finance
Glasgow, G4 0QU
United Kingdom
+44(0)1415483892 (Phone)

HOME PAGE: http://www.strath.ac.uk/staff/andriosopoulosdimitrisdr/

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