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Share Repurchases And Firm Behavior

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  • ADRI DE RIDDER

    (Gotland University, Visby, Sweden)

Abstract

Share repurchases have become an increasingly popular method for companies to distribute cash to its shareholders as many countries have removed restrictions related to this activity. By using a new and unique data set with complete information of each repurchase program, the long-run share price performance following actual share repurchases and whether managers trade strategically are examined for a sample of Swedish firms. I find that the announcement effect surrounding the first repurchase date is small but that repurchasing firms on average outperform several benchmarks during the first three years and thereby exhibit superior information of the stock price. Evidence of strategic trading is documented in small market cap firms. Finally, I document that Swedish firms repurchase more in the first half compared to the second half of the program and also that a higher completion rate is associated with high abnormal return.

Suggested Citation

  • Adri De Ridder, 2009. "Share Repurchases And Firm Behavior," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 12(05), pages 605-631.
    • Handle: RePEc:wsi:ijtafx:v:12:y:2009:i:05:n:s0219024909005427
    DOI: 10.1142/S0219024909005427
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    Citations

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    Cited by:

    1. Tori, Daniele & Onaran, Özlem, 2018. "Financialisation, financial development, and investment: evidence from European non-financial corporations," Greenwich Papers in Political Economy 22196, University of Greenwich, Greenwich Political Economy Research Centre.
    2. De Ridder, Adri, 2015. "Additional evidence on the frequency of share repurchases and managerial timing," The Quarterly Review of Economics and Finance, Elsevier, vol. 56(C), pages 154-164.
    3. Restrepo, Natalia & Uribe, Jorge M. & Manotas, Diego F., 2020. "Dynamic capital structure under changing market conditions in the oil industry: An empirical investigation," Resources Policy, Elsevier, vol. 69(C).
    4. Vinh Huy Nguyen & Suchismita Mishra & Pankaj K. Jain, 2022. "Institutional trading around repurchase announcements: An uphill battle," The Financial Review, Eastern Finance Association, vol. 57(3), pages 485-507, August.

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