Information and Long‐Term Stock Performance Following Open‐Market Share Repurchases

27 Pages Posted: 6 Jul 2013

See all articles by Fei Leng

Fei Leng

University of Washington, Tacoma

Gregory Noronha

University of Washington, Tacoma - Milgard School of Business

Date Written: August 2013

Abstract

We find that firm managers have private information when they decide on open‐market share repurchases, and that this information is significantly correlated with announcement period and post‐announcement abnormal returns. We further find that long‐term post‐announcement abnormal returns are related to private information differently for firms that actually repurchase shares when compared to firms that announce a repurchase program but do not acquire shares. Our results indicate that managers’ private information is only ambiguously revealed by the repurchase announcement, and that the market waits for the firm's subsequent actions, such as actual repurchase, to further interpret the private information.

JEL Classification: G14, G35

Suggested Citation

Leng, Fei and Noronha, Gregory, Information and Long‐Term Stock Performance Following Open‐Market Share Repurchases (August 2013). Financial Review, Vol. 48, Issue 3, pp. 461-487, 2013. Available at SSRN: https://ssrn.com/abstract=2290448 or http://dx.doi.org/10.1111/fire.12011

Fei Leng (Contact Author)

University of Washington, Tacoma ( email )

1900 Commerce Street
Tacoma, WA 98402-3100
United States

Gregory Noronha

University of Washington, Tacoma - Milgard School of Business ( email )

1900 Commerce Street
Campus Box 358420
Tacoma, WA 98402-3100
United States

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