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

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.