The Effects of Ownership and Stock Liquidity on the Timing of Repurchase Transactions

52 Pages Posted: 27 May 2009 Last revised: 26 Aug 2012

See all articles by Amedeo De Cesari

Amedeo De Cesari

University of Manchester - Alliance Manchester Business School - Finance & Accounting Group

Susanne Espenlaub

University of Manchester - Manchester Business School

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance

Michael Simkovic

University of Southern California Gould School of Law; University of Southern California - Marshall School of Business

Date Written: July 16, 2010

Abstract

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.

Keywords: repurchase, timing, insider ownership, institutional ownership

JEL Classification: G14, G35

Suggested Citation

De Cesari, Amedeo and Espenlaub, Susanne and Khurshed, Arif and Simkovic, Michael, The Effects of Ownership and Stock Liquidity on the Timing of Repurchase Transactions (July 16, 2010). 5th Annual Conference on Empirical Legal Studies Paper. Available at SSRN: https://ssrn.com/abstract=1409708 or http://dx.doi.org/10.2139/ssrn.1409708

Amedeo De Cesari

University of Manchester - Alliance Manchester Business School - Finance & Accounting Group ( email )

Crawford House
Booth Street East
Manchester, M15 6PB
United Kingdom
+44 (0) 161 2754298 (Phone)

Susanne Espenlaub

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance ( email )

Crawford House
Oxford Road
Manchester, M15 6PB
United Kingdom
+44 0 161 275 4475 (Phone)
+44 0 161 275 4023 (Fax)

Michael Simkovic (Contact Author)

University of Southern California Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

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