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The Announcement Effects of Off-Market Share Repurchases in Australia

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  • Christine Brown

    (Department of Finance, The University of Melbourne VIC.)

Abstract

This paper investigates the price and volume behaviour around the announcement of a type of off-market repurchase (equal access repurchases) in Australia. In contrast to US studies which document abnormal returns of around 8% for off-market repurchases, we find much smaller but significant abnormal returns of around 1.2% on the announcement date for equal access repurchases. The evidence suggests that the abnormal returns are related to the discount-to-market price at which the offer is made (which reflects special taxation arrangements). We also document a dramatic increase in trading volume on the announcement and subsequent day and argue that this trading may be motivated by the level of tax benefits passed on to participating shareholders.

Suggested Citation

  • Christine Brown, 2007. "The Announcement Effects of Off-Market Share Repurchases in Australia," Australian Journal of Management, Australian School of Business, vol. 32(2), pages 369-385, December.
    • Handle: RePEc:sae:ausman:v:32:y:2007:i:2:p:369-385
    DOI: 10.1177/031289620703200210
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    References listed on IDEAS

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    Cited by:

    1. Hussein Abedi Shamsabadi & Byung S. Min & Imen Tebourbi & Mohammad Nourani, 2020. "Corporate Governance in Australia: Share Repurchases under an Imputation Tax System," Capital Markets Review, Malaysian Finance Association, vol. 28(1), pages 1-23.
    2. Karen Benson & Millicent Chang & Philip Gray & Sue Wright, 2019. "The enduring and evolving influence of Ball and Brown (1968)," Australian Journal of Management, Australian School of Business, vol. 44(1), pages 153-159, February.
    3. Hussein Abedi Shamsabadi & Byung-Seong Min & Richard Chung, 2016. "Corporate governance and dividend strategy: lessons from Australia," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 12(5), pages 583-610, October.
    4. Christian Andres & André Betzer & Markus Doumet & Erik Theissen, 2018. "Open Market Share Repurchases in Germany: A Conditional Event Study Approach," Abacus, Accounting Foundation, University of Sydney, vol. 54(4), pages 417-444, December.
    5. Christine Brown & Daniel Norman, 2010. "Management choice of buyback method: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(4), pages 767-782, December.
    6. Asjeet S. Lamba & Vivek M. Miranda, 2010. "The Role of Executive Stock Options in On‐Market Share Buybacks," International Review of Finance, International Review of Finance Ltd., vol. 10(3), pages 339-363, September.
    7. Hue Hwa Au Yong & Christine Brown & Chloe Choy Yeing Ho, 2014. "Off-Market Buybacks in Australia: Evidence of Abnormal Trading around Key Dates," International Review of Finance, International Review of Finance Ltd., vol. 14(4), pages 551-585, December.
    8. Shumi Akhtar, 2018. "Dividend payout determinants for Australian Multinational and Domestic Corporations," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(1), pages 11-55, March.

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