Firm, Institutional, and Short Sellers’ Trading Behavior around Share Repurchases
Managerial Finance, Forthcoming.
Posted: 8 Jul 2020 Last revised: 27 Oct 2021
Date Written: October 27, 2021
Abstract
This study investigates the valuation motive for increasing share repurchases: we analyze the trading dynamics between short sellers, institutional investors, and the firm itself around share repurchases. We find that firms repurchase more intensely against increased short selling and that institutional investors trade in parallel with the repurchasing firm. Results suggest that firms disagree with short sellers’ intrinsic valuation of the firm, which is consistent with findings of recent studies such as Muzere (2019) and Bargeron and Bonaimé (2020).
Keywords: Share repurchases, Short selling, Institutional investors, Informed investors
JEL Classification: G01, G12, G14, G34, G35
Suggested Citation: Suggested Citation
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