Motives for Multiple Open-Market Repurchase Programs

Financial Management, Vol. 32, No. 2, Summer 2003

Posted: 24 Jun 2003

See all articles by Murali Jagannathan

Murali Jagannathan

SUNY at Binghamton - School of Management

Clifford P. Stephens

Louisiana State University, Baton Rouge - E.J. Ourso College of Business Administration

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Abstract

We examine differences in motives, firm characteristics, market performance, and subsequent operating performance of firms that repurchase shares frequently versus firms that repurchase only occasionally or infrequently. Frequent repurchasers are much larger, have significantly less variation in operating income, and higher dividend payout ratios. Infrequent repurchases are made by smaller firms with more volatile operating income, lower institutional ownership, lower market-to-book ratios and high degrees of asymmetric information. Although most repurchases are viewed favorably by the market, infrequent repurchases receive a much stronger positive reaction. Finally, we find little evidence of improved operating performance following repurchase announcements.

Suggested Citation

Jagannathan, Murali and Stephens, Clifford P., Motives for Multiple Open-Market Repurchase Programs. Financial Management, Vol. 32, No. 2, Summer 2003, Available at SSRN: https://ssrn.com/abstract=410400

Murali Jagannathan

SUNY at Binghamton - School of Management ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States
607-777-4639 (Phone)

Clifford P. Stephens (Contact Author)

Louisiana State University, Baton Rouge - E.J. Ourso College of Business Administration ( email )

Department of Finance
2159 CEBA
Baton Rouge, LA 70803-6308
United States
225-578-6334 (Phone)

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