Buybacks Around the World

64 Pages Posted: 15 Mar 2012 Last revised: 7 Dec 2012

See all articles by Alberto Manconi

Alberto Manconi

Bocconi University - Department of Finance; Centre for Economic Policy Research (CEPR)

Urs Peyer

INSEAD - Finance

Theo Vermaelen

INSEAD - Finance

Date Written: December 2, 2012


This paper documents that short-term returns around share repurchase announcements and long-run abnormal returns afterwards are following the same pattern in non-US firms as document by prior literature for U.S. firms. We test whether cross-country differences in corporate governance quality and regulatory differences can explain variation in the short- and long-run abnormal returns. We find positive announcement returns around the world, higher in better governed countries and firms, and where regulation allows the board rather than the shareholders to approve a buyback announcement. Long-run abnormal returns are also observed globally and they are related to an undervaluation index (Peyer and Vermaelen, 2009, RFS) consistent with the interpretation that managers are able to time the market by buying back their own shares at low prices. Governance quality is also related to returns. Firms with lower governance ratings outperform those with higher ratings in the long run consistent with the buyback signalling lower agency problems than expected by the market. Furthermore, long run abnormal returns are higher in board approval countries suggesting that board approval regimes make managers act more in the interest of long-term shareholders rather than using buybacks to manipulate share prices.

Keywords: Share buyback, corporate governance

JEL Classification: G34, G35

Suggested Citation

Manconi, Alberto and Peyer, Urs C. and Vermaelen, Theo, Buybacks Around the World (December 2, 2012). AFA 2013 San Diego Meetings Paper. Available at SSRN: or

Alberto Manconi (Contact Author)

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136


Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

Urs C. Peyer

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
+33 1 6072 4178 (Phone)
+33 1 6072 4045 (Fax)

Theo Vermaelen

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
33 1 60 72 42 63 (Phone)
33 1 60 72 40 45 (Fax)

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