Share Repurchases and Managerial Reference Points

47 Pages Posted: 19 Mar 2021 Last revised: 23 Aug 2022

See all articles by Nicholas Clarke

Nicholas Clarke

Middle Tennessee State University - Department of Economics and Finance

Dylan Norris

Troy University

Andrew Schrowang

Florida State University - Department of Finance

Date Written: August 2022

Abstract

Corporate repurchase activity increases as a firm’s current stock price declines in relation to the price at which it previously repurchased shares. This relation holds up to various empirical specifications and robustness tests. The effect weakens around stock splits, is asymmetric in stock gains and losses, and strengthens when prior repurchases are larger than the sample median. The results suggest a behavioral pattern in which managers use prior repurchase prices as reference points for current repurchases.

Keywords: Reference Point, Stock Repurchases, Behavioral Finance

JEL Classification: G32, G41

Suggested Citation

Clarke, Nicholas and Norris, Dylan and Schrowang, Andrew, Share Repurchases and Managerial Reference Points (August 2022). Available at SSRN: https://ssrn.com/abstract=3805055 or http://dx.doi.org/10.2139/ssrn.3805055

Nicholas Clarke (Contact Author)

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

Murfreesboro, TN 37132
United States

Dylan Norris

Troy University ( email )

Troy, AL 36082
United States

Andrew Schrowang

Florida State University - Department of Finance ( email )

821 Academic Way, RBA 311
P.O. Box 3061110
Tallahassee, FL 32306-1042
United States

HOME PAGE: http://sites.google.com/view/andrew-schrowang/home

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