Voluntary Disclosures Regarding Open Market Repurchase Programs

58 Pages Posted: 27 Aug 2014 Last revised: 22 Jan 2022

See all articles by Leonce Bargeron

Leonce Bargeron

University of Kentucky - Gatton College of Business and Economics

Alice A. Bonaime

University of Arizona

William Docimo

University of Pittsburgh - Katz Graduate School of Business

Mei Feng

University of Pittsburgh - Katz Graduate School of Business

Shawn Thomas

University of Pittsburgh - Katz Graduate School of Business

Date Written: January 19, 2022

Abstract

This paper studies firms’ voluntary disclosure behavior using discretionary announcements that firms have suspended, resumed, or completed their open market repurchase programs. We document that such disclosures are common and value-relevant, as evidenced by significant stock market reactions to these disclosures. We find that voluntary disclosures about repurchase programs are also informative about subsequent repurchase activities. Firms that voluntarily disclose repurchase suspensions are significantly more likely to ultimately complete their current repurchase programs and initiate new repurchase programs than firms that could have voluntarily announced suspensions but did not. Consistent with voluntary disclosures of bad news helping firms to establish reputations for repurchase transparency, firms voluntarily disclosing repurchase suspensions experience larger positive average abnormal returns around subsequent repurchase authorizations. We also exploit a change in mandatory reporting requirements for repurchases to document that voluntary updates are more frequent when there are fewer mandatory disclosures regarding repurchase activities, with an important exception during times of particularly high macroeconomic uncertainty such as during the Great Recession and the COVID-19 pandemic.

Keywords: Voluntary disclosure; Payout policy; Share repurchases; Payout flexibility

JEL Classification: G35, M41

Suggested Citation

Bargeron, Leonce and Bonaime, Alice A. and Docimo, William and Feng, Mei and Thomas, Shawn, Voluntary Disclosures Regarding Open Market Repurchase Programs (January 19, 2022). Available at SSRN: https://ssrn.com/abstract=2486843 or http://dx.doi.org/10.2139/ssrn.2486843

Leonce Bargeron

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States
859-257-4397 (Phone)

Alice A. Bonaime

University of Arizona ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

William Docimo

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Mei Feng

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Shawn Thomas (Contact Author)

University of Pittsburgh - Katz Graduate School of Business ( email )

246 Mervis Hall
Pittsburgh, PA 15260
United States
412-648-1648 (Phone)
412-648-1693 (Fax)

HOME PAGE: http://www.pitt.edu/~shthomas/index.htm

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