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EU regulation and open market share repurchases: New evidence

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  • Drousia, Angeliki
  • Episcopos, Athanasios
  • Leledakis, George N.
  • Pyrgiotakis, Emmanuil

Abstract

This paper re-examines the impact of the EU Market Abuse Directive (MAD) on the market reaction around share repurchase announcements. We use a unique hand-collected dataset of firms listed on the Athens Stock Exchange, and we find evidence that contrasts with previous conclusions for large European economies. The implementation of the MAD is followed by a significant increase in announcement abnormal returns, which is more pronounced in initial repurchase programs. Our results remain robust to a series of robustness tests. We attribute our findings to cross-country differences in institutional framework and pre-MAD existing national laws. Collectively, our results support the notion that EU directives do not have a uniform effect across Member States. Thus, the impact of such reforms should also be examined in individual capital market studies.

Suggested Citation

  • Drousia, Angeliki & Episcopos, Athanasios & Leledakis, George N. & Pyrgiotakis, Emmanuil, 2020. "EU regulation and open market share repurchases: New evidence," MPRA Paper 105683, University Library of Munich, Germany, revised 31 Jan 2021.
    • Handle: RePEc:pra:mprapa:105683
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    More about this item

    Keywords

    Share repurchases; Market Abuse Directive; safe harbor; signaling undervaluation.;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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