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

59 Pages Posted: 12 Jul 2011 Last revised: 26 Aug 2012

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

USC Gould School of Law; Harvard Law School - John M. Olin Center for Law and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 6, 2012

Abstract

We analyze detailed monthly data on U.S. open market stock repurchases (OMRs) that recently became available following stricter disclosure requirements. We find evidence that OMRs are timed to benefit non-selling shareholders. We present evidence that the profits to companies from timing repurchases are significantly related to ownership structure. Institutional ownership reduces companies’ opportunities to repurchase stock at bargain prices. At low levels, insider ownership increases timing profits and at high levels it reduces them. Stock liquidity increases profits from timing OMRs.

Keywords: open market repurchase, timing, ownership, liquidity

JEL Classification: G35, G38

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 (June 6, 2012). Available at SSRN: https://ssrn.com/abstract=1884171 or http://dx.doi.org/10.2139/ssrn.1884171

Amedeo De Cesari (Contact Author)

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

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

Harvard Law School - John M. Olin Center for Law and Economics ( email )

Cambridge, MA 02138
United States

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