Managerial Trustworthiness and Buybacks

56 Pages Posted: 27 Nov 2018 Last revised: 5 Nov 2020

See all articles by Sterling Huang

Sterling Huang

Singapore Management University - School of Accountancy

Kaisa Snellman

INSEAD - Organisational Behavior

Theo Vermaelen

INSEAD - Finance

Date Written: October 1, 2020


CEO trustworthiness is positively related to long-term excess returns after buyback announcements. When the CEO is trustworthy, statements that the stock is undervalued are more credible. CEO trustworthiness is initially measured by the extent to which people in the county where the company headquarters is located trust each other. Further, the positive impact of trustworthiness on excess returns is higher when the CEO has been a long-term resident of a high-trust county, and correspondingly, trustworthy CEOs are less likely to be accused of financial misreporting. Our conclusions are confirmed when we use alternative measures of trustworthiness such as employee trust and CEO integrity.

Keywords: Buybacks, Market Timing, CEO Trustworthiness, Buyback Motivations

JEL Classification: G32, G30

Suggested Citation

Huang, Sterling and Snellman, Kaisa and Vermaelen, Theo, Managerial Trustworthiness and Buybacks (October 1, 2020). European Corporate Governance Institute – Finance Working Paper 703/2020, Available at SSRN: or

Sterling Huang (Contact Author)

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
6808 7929 (Phone)

Kaisa Snellman

INSEAD - Organisational Behavior ( email )

Boulevard de Constance
Fontainebleau 77305

Theo Vermaelen

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
33 1 60 72 42 63 (Phone)
33 1 60 72 40 45 (Fax)

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