Mandatory Disclosure and Firm Behavior: Evidence from Share Repurchases

53 Pages Posted: 6 Apr 2010 Last revised: 26 Jul 2014

Date Written: July 25, 2014


This paper examines changes in corporate behavior around the 2003 modification to SEC Rule 10b-18, which mandates enhanced disclosure of repurchase transactions. Firms announce significantly fewer and slightly smaller open market repurchase plans in the enhanced disclosure environment. However, completion rates (the amount of stock repurchased as a percentage of the announced amount) significantly increase. More conservative announcement strategies and more aggressive completion rates are consistent with a decline in false signaling. Indeed, open market repurchase announcements are viewed as more credible on average in the enhanced disclosure environment; after controlling for firm characteristics, cumulative abnormal announcement returns are significantly greater in the high disclosure period. As with any analysis based on a regulatory change affecting all firms simultaneously, other unobservable, macroeconomic trends could have affected repurchase behavior. Nonetheless, these results are consistent with significant changes in corporate behavior around new mandatory disclosures.

Keywords: Disclosure, information asymmetry, share repurchases, share buyback, repurchase completion rate

JEL Classification: G14, G30, G35, G38, M48, K22

Suggested Citation

Bonaime, Alice A., Mandatory Disclosure and Firm Behavior: Evidence from Share Repurchases (July 25, 2014). Accounting Review, Forthcoming, Available at SSRN: or

Alice A. Bonaime (Contact Author)

University of Arizona ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

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