Firm, Institutional, and Short Sellers’ Trading Behavior around Share Repurchases

Managerial Finance, Forthcoming.

Posted: 8 Jul 2020 Last revised: 27 Oct 2021

See all articles by Reuben Segara

Reuben Segara

University of Sydney Business School; Financial Research Network (FIRN)

Jin Young Yang

Zayed University

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

Segara, Reuben and Yang, Jin Young, Firm, Institutional, and Short Sellers’ Trading Behavior around Share Repurchases (October 27, 2021). Managerial Finance, Forthcoming., Available at SSRN: https://ssrn.com/abstract=3610640 or http://dx.doi.org/10.2139/ssrn.3610640

Reuben Segara

University of Sydney Business School ( email )

Sydney
Australia
+61 2 9351 8790 (Phone)
+61 2 9351 6461 (Fax)

HOME PAGE: http://www.sydney.edu.au/business/about/our-people/academic-staff/reuben-segara.html

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Jin Young Yang (Contact Author)

Zayed University ( email )

P.O. Box 4783
Abu Dhabi
United Arab Emirates

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