Repurchases Have Changed

81 Pages Posted: 24 Nov 2015

See all articles by Inmoo Lee

Inmoo Lee

KAIST College of Business

Yuen Park

Hallym University

Neil D. Pearson

University of Illinois at Urbana-Champaign - Department of Finance

Date Written: November 1, 2015


Using recent U.S. data we find that the patterns of returns around open-market share repurchases have changed compared to existing results based on earlier samples. The long-horizon abnormal returns estimated using various methodologies following repurchase announcements made after 2001 are much smaller than those following earlier announcements, and we find evidence of poorer performance by firms that repeatedly buy back shares. Other returns also differ: the mean abnormal return in the year prior to the repurchase announcement is only –6.0% for recent repurchases, in contrast to –13.3% for earlier repurchases, and the abnormal returns in the five-day window surrounding the announcement are also significantly smaller during the recent period. We also find limited evidence of the risk changes documented using earlier data. We explore possible explanations for these changes in returns around repurchase announcements by examining differences in the characteristics of repurchasing firms in the different subsamples.

Keywords: Share Repurchases, Payout Policies

JEL Classification: G30, G32, G35

Suggested Citation

Lee, Inmoo and Park, Yuen and Pearson, Neil D., Repurchases Have Changed (November 1, 2015). KAIST College of Business Working Paper Series No. 2015-022, Available at SSRN: or

Inmoo Lee (Contact Author)

KAIST College of Business ( email )

85 Hoegiro Dongdaemun-Gu
Seoul 02455
Korea, Republic of (South Korea)

Yuen Park

Hallym University ( email )

39 Hallymdaehak-gil
Chuncheon, Gangwon-do, 200-702
Korea, Republic of (South Korea)

Neil D. Pearson

University of Illinois at Urbana-Champaign - Department of Finance ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
217-244-0490 (Phone)
217-244-9867 (Fax)

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