Repurchases for Price Impact: Evidence from Fragile Stocks

90 Pages Posted: 8 Jan 2021 Last revised: 12 May 2022

See all articles by Massimo Massa

Massimo Massa

INSEAD - Finance

David Schumacher

McGill University

Yan Wang

McMaster University

Date Written: May 11, 2022


We highlight an important but overlooked characteristic of financial fragility: “fragile” stocks have lower price impact because they are sensitive to non-fundamental liquidity shocks. This reduces their sensitivity to corporate actions with price impact and affects the firms’ incentives to engage in such actions. We show that fragile firms have lower share repurchases, issue more equity, and invest more. We establish causality by relating changes in corporate actions to exogenous changes in fragility induced by mergers of asset managers. Our results suggest that financial fragility has direct but unexpected real implications for corporate actions.

Keywords: Share Repurchases, Liquidity, Financial Fragility, Corporate Investment

JEL Classification: G23, G31, G35

Suggested Citation

Massa, Massimo and Schumacher, David and Wang, Yan, Repurchases for Price Impact: Evidence from Fragile Stocks (May 11, 2022). Available at SSRN: or

Massimo Massa

INSEAD - Finance ( email )

Boulevard de Constance
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David Schumacher (Contact Author)

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
5143984778 (Phone)


Yan Wang

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4

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