Open Market Repurchase Program, Dividend Payment Status, Information Asymmetry, and Institutional Ownership

Posted: 1 Feb 2014 Last revised: 26 Aug 2015

See all articles by Viet Hung Pham

Viet Hung Pham

La Trobe University - La Trobe Business School - Department of Economics and Finance

Balasingham Balachandran

La Trobe University - School of Economics and Finance; Financial Research Network (FIRN)

Darren Henry

La Trobe University - Department of Economics and Finance; Financial Research Network (FIRN)

Lily Nguyen

The University of Queensland - UQ Business School

Date Written: July 14, 2014

Abstract

This paper examines the relationship between previous dividend payment policy and the cumulative abnormal return around the OMR program announcement day. The results show that the market reacts more positively to OMR program announcements by non-dividend firms or with no change in dividend payment than to those of dividend paying or changing in dividend payment firms. We also provide evidence that dividend activities mitigate the effect of information asymmetry caused by ownership structure. Finally, after the 2003 tax cut, the market has also reacted less positively to open market repurchase announcements than before 2003.

Keywords: Open market repurchase, dividend status, information asymmetry, Institutional ownership

JEL Classification: G14, G34, G35

Suggested Citation

Pham, Viet Hung and Balachandran, Balasingham and Henry, Darren and Nguyen, Lily, Open Market Repurchase Program, Dividend Payment Status, Information Asymmetry, and Institutional Ownership (July 14, 2014). 2014 Financial Markets & Corporate Governance Conference. Available at SSRN: https://ssrn.com/abstract=2387338 or http://dx.doi.org/10.2139/ssrn.2387338

Viet Hung Pham (Contact Author)

La Trobe University - La Trobe Business School - Department of Economics and Finance ( email )

Bundoora
Melbourne, 3086
Australia

Balasingham Balachandran

La Trobe University - School of Economics and Finance ( email )

La Trobe University
Bundoora, Vic, 3086
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Darren Henry

La Trobe University - Department of Economics and Finance ( email )

Department of Economics and Finance
La Trobe Business School
Bundoora 3086 Victoria
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Lily Nguyen

The University of Queensland - UQ Business School ( email )

St Lucia
Brisbane, Queensland 4072
Australia

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