Open Market Share Repurchases: What the Actual Trades Tell us Regarding the Completion Rates and Risk

45 Pages Posted: 28 Feb 2010 Last revised: 14 Nov 2011

See all articles by Dimitris Andriosopoulos

Dimitris Andriosopoulos

Strathclyde Business School

Hafiz Hoque

University of York; City University London - Sir John Cass Business School

Date Written: February 1, 2010

Abstract

This paper investigates the announcement of intention to repurchase shares in the open market and the respective actual repurchase trades. We find that firms repurchase on average 74% of the intended amount of shares. In addition, size, leverage and dividend yield have a positive relationship with the completion rate of repurchase programme, contrary to the initiation lag and ownership concentration which have a negative relationship. We document that repurchasing firms experience a significant decline in systematic risk when the repurchase trades are executed, not when announcing the intention to repurchase. Finally, Fama-French regressions and the decomposition of firms’ total risk in systematic and idiosyncratic risk confirms our findings on risk changes.

Keywords: Share repurchases, information asymmetry, market timing, price support, firm risk, completion rate, actual trades

JEL Classification: G14, G32, G34, G35

Suggested Citation

Andriosopoulos, Dimitris and Hoque, Hafiz, Open Market Share Repurchases: What the Actual Trades Tell us Regarding the Completion Rates and Risk (February 1, 2010). Available at SSRN: https://ssrn.com/abstract=1559835 or http://dx.doi.org/10.2139/ssrn.1559835

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/

Hafiz Hoque

University of York ( email )

The York Management School
York, YO10 5GD
United Kingdom
+44 (0) 7515890949 (Phone)

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44(0)7515890949 (Phone)
+44(0)2070408546 (Fax)

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