Off‐Market Buybacks in Australia: Evidence of Abnormal Trading Around Key Dates

35 Pages Posted: 3 Dec 2014

See all articles by Hue Hwa Au Yong

Hue Hwa Au Yong

Monash University - Department of Banking and Finance; Financial Research Network (FIRN)

Christine A. Brown

Department of Banking and Finance; Financial Research Network (FIRN)

Chloe Choy Yeing Ho

Monash University - Department of Accounting and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: December 2014

Abstract

Off‐market share buybacks in Australia are often structured with the buyback price comprising a large dividend component (which may carry imputation tax credits) and a small capital component. This unique structure has the consequence that institutions on low tax rates stand to benefit most from selling shares into the buyback. In this article, we explore evidence of abnormal trading activities around key dates in the conduct of off‐market buybacks and investigate the drivers of these activities. We find evidence of abnormal trading activities around the initial announcement and the final announcement dates of the buyback. The significant differences in abnormal volumes between the buybacks with and without imputation tax credits highlight the importance of tax motivations in explaining abnormal trading activities in the shares of companies conducting off‐market buybacks, and are consistent with observed buying pressure around the announcement of the buyback.

Suggested Citation

Au Yong, Hue Hwa and Brown, Christine A. and Ho, Chloe, Off‐Market Buybacks in Australia: Evidence of Abnormal Trading Around Key Dates (December 2014). International Review of Finance, Vol. 14, Issue 4, pp. 551-585, 2014, Available at SSRN: https://ssrn.com/abstract=2533273 or http://dx.doi.org/10.1111/irfi.12037

Hue Hwa Au Yong (Contact Author)

Monash University - Department of Banking and Finance ( email )

PO Box 197
Caulfield East, Victoria 3145
Australia

Financial Research Network (FIRN)

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

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

Christine A. Brown

Department of Banking and Finance ( email )

Building 11E
Clayton, Victoria 3800
Australia
+61 3 99031793 (Phone)
+61 3 99055475 (Fax)

Financial Research Network (FIRN)

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

HOME PAGE: www.firn.org.au

Chloe Ho

Monash University - Department of Accounting and Finance ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
634
PlumX Metrics