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It's just a matter of time: Abnormal returns after firms stop repurchasing shares

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  • Clarke, Nicholas

Abstract

This paper uses a novel method to assess the timing of corporate share repurchases by examining abnormal returns after firms stop repurchasing shares. This method reveals several new findings. First, repurchasing firms experience positive abnormal returns only after they stop repurchasing shares. Second, the impact of repurchase timing is underestimated when abnormal returns are estimated after all repurchases. Third, there is evidence that frequent repurchasers and large firms time their repurchases, but only when measuring abnormal returns after they stop repurchasing shares. These findings have important implications for future research and regulation surrounding share repurchases.

Suggested Citation

  • Clarke, Nicholas, 2022. "It's just a matter of time: Abnormal returns after firms stop repurchasing shares," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322003373
    DOI: 10.1016/j.frl.2022.103113
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    References listed on IDEAS

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    Cited by:

    1. Ma, Pengfei & Li, Chengcheng & Wang, Xiaoqiong, 2024. "Why do undervalued firms repurchase shares? Evidence based on the market-timing effect in China," Global Finance Journal, Elsevier, vol. 59(C).
    2. Yasmin Jamadar & Hossain Mohammad Reyad & Md. Kausar Alam & Oli Ahad Thakur & Syed A. Mamun, 2024. "Why Do Companies Share Buybacks? Evidence from the UK," Risks, MDPI, vol. 12(10), pages 1-19, October.

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    More about this item

    Keywords

    Share repurchases; Repurchase timing; Equity mispricing;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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