Download This PaperEU regulation and open market share repurchases: New evidence
The European Journal of Finance, volume 29, issue 9, 2023[10.1080/1351847X.2021.1910529]
46 Pages Posted: 16 Apr 2018 Last revised: 29 Jun 2023
Date Written: June 28, 2023
Abstract
This paper re-examines the impact of the EU Market Abuse Directive (MAD) on the market reaction around share repurchase announcements. We use a unique hand-collected dataset of firms listed on the Athens Stock Exchange, and we find evidence that contrasts with previous conclusions for large European economies. The implementation of the MAD is followed by a significant increase in announcement abnormal returns, which is more pronounced in initial repurchase programs. Our results remain robust to a series of robustness tests. We attribute our findings to cross-country differences in institutional framework and pre-MAD existing national laws. Collectively, our results support the notion that EU directives do not have a uniform effect across Member States. Thus, the impact of such reforms should also be examined in individual capital market studies.
Keywords: Share repurchases, Market Abuse Directive, safe harbor, signaling undervaluation.
JEL Classification: G14, G15, G35
Suggested Citation: Suggested Citation