Actual Share Repurchase and Corporate Liquidity

Ginglinger, Edith; Hamon, Jacques

doi:10.2139/ssrn.499164

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Actual Share Repurchase and Corporate Liquidity

39 Pages Posted: 12 May 2004

See all articles by Edith Ginglinger

Edith Ginglinger

Université Paris-Dauphine, PSL Research University; European Corporate Governance Institute (ECGI)

Jacques Hamon

Université Paris Dauphine - CEREG

Date Written: September 2003

Abstract

Research into the impact of open market share repurchases has been hindered by the lack of data available on actual share repurchases in many countries, including the U.S. Using a previously unaccessed database containing detailed information on 36,848 repurchase days concerning 352 French firms, we show that corporate share repurchases have a significantly adverse effect on the liquidity of the trading day concerned, whether measured by bid-ask spread or depth. Our results also indicate that although on average managers have some timing ability, only the smallest firms listed on the least liquid market segments successfully take advantage of it.

Keywords: Open market share repurchases, liquidity

JEL Classification: G14, G32, G35

Suggested Citation: Suggested Citation

Ginglinger, Edith and Hamon, Jacques, Actual Share Repurchase and Corporate Liquidity (September 2003). Available at SSRN: https://ssrn.com/abstract=499164 or http://dx.doi.org/10.2139/ssrn.499164