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The Announcement Effects of Restricted Open Market Share Repurchases: Experience from Taiwan

Author

Listed:
  • Miawjane Chen

    (Department of Accounting, Tamkang University, Tamsui 251, Taiwan, ROC;
    Department of Finance, National Central University, Chung-li 320, Taiwan, ROC)

  • Chao-Liang Chen

    (Department of Economics, Tamkang University, Tamsui 251, Taiwan, ROC)

  • Wan-Hsiu Cheng

    (Department of Finance, Taichung Healthcare and Management University, Wefeng 413, Taiwan, ROC)

Abstract

In this paper we empirically examine the effects of 451 restricted share repurchase announcements in Taiwan. Their 3-day cumulative abnormal returns are all significantly positive for different purposes and Tobin's qs. However, there is no significant difference in abnormal returns for different repurchasing purposes. This indicates that mandating a purpose is not really an effective tool for limiting managerial choice. Moreover, when the related variables are controlled, the other empirical results we conducted indicate that, at least in Taiwan, the traditional signaling hypothesis and the free cash flow hypothesis can function simultaneously to explain the effects of the restricted repurchase announcements.

Suggested Citation

  • Miawjane Chen & Chao-Liang Chen & Wan-Hsiu Cheng, 2004. "The Announcement Effects of Restricted Open Market Share Repurchases: Experience from Taiwan," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 335-354.
    • Handle: RePEc:wsi:rpbfmp:v:07:y:2004:i:03:n:s0219091504000147
    DOI: 10.1142/S0219091504000147
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    Citations

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    Cited by:

    1. Wang, C. Edward & DeGennaro, Ramon P., 2019. "Overshooting: Evidence from share repurchases and subsidiary selling," Research in International Business and Finance, Elsevier, vol. 49(C), pages 41-54.
    2. Tai-Yuan Chen & Lie-Jane Kao & Hsing-Yu Lin, 2011. "The Long-Term Wealth Effect Of Share Repurchases Evidence From Taiwan," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 5(2), pages 21-33.
    3. Dimitris Andriosopoulos & Chrysovalantis Gaganis & Fotios Pasiouras, 2016. "Prediction of open market share repurchases and portfolio returns: evidence from France, Germany and the UK," Review of Quantitative Finance and Accounting, Springer, vol. 46(2), pages 387-416, February.

    More about this item

    Keywords

    Restricted open market share repurchases; traditional signaling hypothesis; free cash flow hypothesis; Taiwan;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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