Buying Slow and Selling Fast: Speed Asymmetry in Share Issuances and Repurchases

Posted: 5 Dec 2019

See all articles by Philip Bond

Philip Bond

University of Washington - Michael G. Foster School of Business

Yue Yuan

London School of Economics & Political Science (LSE) - Department of Finance

Hongda Zhong

London School of Economics & Political Science (LSE) - Department of Finance

Date Written: November 19, 2019

Abstract

Almost all firms repurchase shares gradually through open market repurchase (OMR) programs as opposed to using the quicker alternative of tender offers. In contrast, issue methods are both more diverse, and often quicker: while a significant minority of firms issue shares using at-the-market offerings, analogous to OMR programs, a majority of firms issue shares swiftly via SEOs, analogous to the rarely-used tender offers. We show that this asymmetry in the diversity of methods, and in transaction speeds, is a natural consequence of the single informational friction of a firm having superior information to investors.

Suggested Citation

Bond, Philip and Yuan, Yue and Zhong, Hongda, Buying Slow and Selling Fast: Speed Asymmetry in Share Issuances and Repurchases (November 19, 2019). Available at SSRN: https://ssrn.com/abstract=3489555

Philip Bond (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

Yue Yuan

London School of Economics & Political Science (LSE) - Department of Finance ( email )

United Kingdom

Hongda Zhong

London School of Economics & Political Science (LSE) - Department of Finance ( email )

United Kingdom

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