It’s just a matter of time: Abnormal returns after firms stop repurchasing shares

16 Pages Posted: 9 Mar 2020 Last revised: 1 Jul 2022

See all articles by Nicholas Clarke

Nicholas Clarke

Middle Tennessee State University - Department of Economics and Finance

Date Written: September 1, 2020

Abstract

This paper uses a novel method to assess the timing of corporate share repurchases by examining
abnormal returns after firms stop repurchasing shares. This method reveals several new findings.
First, repurchasing firms only experience positive abnormal returns after they stop repurchasing
shares. Second, these positive abnormal returns are attenuated to zero when abnormal returns are
estimated after all repurchases. Third, there is evidence that frequent repurchasers and large firms
time their repurchases, but only when measuring abnormal returns after they stop repurchasing
shares. These findings have important implications for future research and regulation surrounding
share repurchases.

Keywords: Share repurchases; Repurchase timing; Equity mispricing

JEL Classification: G30, G32, G35

Suggested Citation

Clarke, Nicholas, It’s just a matter of time: Abnormal returns after firms stop repurchasing shares (September 1, 2020). Finance Research Letters, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3537842 or http://dx.doi.org/10.2139/ssrn.3537842

Nicholas Clarke (Contact Author)

Middle Tennessee State University - Department of Economics and Finance ( email )

Murfreesboro, TN 37132
United States

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