Are Buybacks Good for Long-Term Shareholder Value? Evidence from Buybacks around the World

65 Pages Posted: 26 Sep 2013 Last revised: 24 Mar 2018

Alberto Manconi

Bocconi University - Department of Finance

Urs Peyer

INSEAD - Finance

Theo Vermaelen

INSEAD - Finance

Date Written: March 7, 2018

Abstract

Using a sample of over 9,000 buyback announcements from 31 non-U.S. countries, we find support for the results of studies based on U.S. data: on average, share repurchases are associated with significant positive short-term and long-term excess returns. However, excess returns depend on the likelihood of undervaluation, the efficiency and liquidity of equity markets, and the popularity of stock option compensation. In contrast to findings in U.S. markets, we do not find that these long-term excess returns are simply a compensation for takeover risk or have become less significant in recent years.

Keywords: buyback, share repurchase, governance, market timing, agency problems, global regulation

JEL Classification: G3

Suggested Citation

Manconi, Alberto and Peyer, Urs and Vermaelen, Theo, Are Buybacks Good for Long-Term Shareholder Value? Evidence from Buybacks around the World (March 7, 2018). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 436/2014; INSEAD Working Paper No. 2013/101/FIN. Available at SSRN: https://ssrn.com/abstract=2330807 or http://dx.doi.org/10.2139/ssrn.2330807

Alberto Manconi

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://mypage.unibocconi.eu/albertomanconi/

Urs C. Peyer (Contact Author)

INSEAD - Finance ( email )

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

Theo Vermaelen

INSEAD - Finance ( email )

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

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