Open-Market Share Repurchase Programs and Bid/Ask Spreads on the NYSE: Implications for Corporate Payout Policy

JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS, September 1995

Posted: 18 Apr 1998

See all articles by James D. Miller

James D. Miller

Smith College - Department of Economics

John J. McConnell

Purdue University

Abstract

This study analyzes bid/ask spreads surrounding announcements of open- market share repurchase programs for a sample of 248 announcements of repurchase programs by NYSE firms over the period January 1984 through June 1988. The sample includes 158 announcements of new programs and 90 announcements regarding continuations of already existing programs. Contrary to the theory that spreads increase surrounding the announcement of open-market share repurchase programs, with both univariate and multi-variate tests that control for changes in volume, changes in stock price volatility, and changes in the level of stock price, we find no evidence of an increase in spread surrounding announcement of open-market share repurchase programs.

JEL Classification: G35

Suggested Citation

Miller, James D. and McConnell, John J., Open-Market Share Repurchase Programs and Bid/Ask Spreads on the NYSE: Implications for Corporate Payout Policy. JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS, September 1995. Available at SSRN: https://ssrn.com/abstract=6721

James D. Miller

Smith College - Department of Economics ( email )

101 Pierce Hall
Northampton, MA 01063
United States
413-585-3613 (Phone)
413-585-7611 (Fax)

John J. McConnell (Contact Author)

Purdue University ( email )

MGMT, KRAN
403 West State St.
West Lafayette, IN 47907-2056
United States
765-494-5910 (Phone)
765-494-7863 (Fax)

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