Open Market Stock Repurchase And Stock Price Behavior When Management Values Real Investment PDF Download
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Author | : Nobuyuki Isagawa |
Publisher | : |
Total Pages | : |
Release | : 2001 |
Genre | : |
ISBN | : |
Download Open-Market Stock Repurchase and Stock Price Behavior When Management Values Real Investment Book in PDF, ePub and Kindle
This paper provides a simple explanation of open-market stock repurchases and the stock price behavior surrounding them. There is ex ante asymmetry of information with regard to the private benefits that corporate managers can attain from real investments. In our model, open-market repurchase announcements reveal information about the managers' private benefits when real investment opportunities are unprofitable in terms of firm values. This study differs from previous studies in that we show that announcements of open-market repurchase programs can be believable without the restriction that the announcements are commitments. Empirically, the model simultaneously predicts that a stock price will drop prior to an open-market repurchase announcement and will rise in response to the announcement. These predictions are consistent with stylized facts.
Author | : Theo Vermaelen |
Publisher | : Now Publishers Inc |
Total Pages | : 117 |
Release | : 2005 |
Genre | : Business & Economics |
ISBN | : 1933019166 |
Download Share Repurchases Book in PDF, ePub and Kindle
This survey derives some of the key results on the taxation of international investment in variants of one model of multinational investment.
Author | : Jesse M. Fried |
Publisher | : |
Total Pages | : 63 |
Release | : 2014 |
Genre | : |
ISBN | : |
Download Informed Trading and False Signaling with Open Market Repurchases Book in PDF, ePub and Kindle
Public companies in the United States and elsewhere increasingly use open market stock buybacks, rather than dividends, to distribute cash to shareholders. Academic commentators have emphasized the possible benefits of such repurchases for shareholders. However, little attention has been paid to their potential drawbacks. This Article shows that managers use open market repurchases to indirectly buy stock for themselves at a bargain price. Managers also boost stock prices by announcing repurchase programs they do not intend to execute, enabling them to unload their own shares at a higher price. Such bargain repurchases and inflated-price sales systematically transfer significant amounts of value from public investors to managers, as well as distort managers' payout decisions. The Article concludes by proposing a new approach to regulating open market repurchases: requiring firms to disclose specific details of their buy orders in advance. This pre-repurchase disclosure rule, the Article shows, would undermine managers' ability to use repurchases for informed trading and false signaling, thereby reducing the resulting distortions and costs to shareholders. Moreoever, it would achieve these objectives without eroding any of the potential benefits of repurchases.
Author | : Kenneth R. Marks |
Publisher | : |
Total Pages | : 84 |
Release | : 1976 |
Genre | : Business & Economics |
ISBN | : |
Download The Stock Price Performance of Firms Repurchasing Their Own Shares Book in PDF, ePub and Kindle
Author | : |
Publisher | : |
Total Pages | : 83 |
Release | : 2007 |
Genre | : Corporations |
ISBN | : 9781846632563 |
Download Payout Policy Book in PDF, ePub and Kindle
Dividend policy continues to be among the premier unsolved puzzles in finance. A number of theories have been advanced to explain dividend policy. This e-book briefly reviews the principal theories of payout policy and dividend policy and summarizes the empirical evidence on these theories. Empirical evidence is equivocal and the search for new explanation for dividends continues.
Author | : Timothy J. Nantell and Joseph E. Finnerty |
Publisher | : |
Total Pages | : 23 |
Release | : 1974 |
Genre | : |
ISBN | : |
Download Effect of stock repurchase on price performance.Working Paper No.94 Book in PDF, ePub and Kindle
Author | : Chun An Li |
Publisher | : |
Total Pages | : 22 |
Release | : 2019 |
Genre | : |
ISBN | : |
Download Can the Open Market React to Stock Repurchases Announcement Correctly? Book in PDF, ePub and Kindle
In this study, we explore the market reaction to the announcement of stock repurchase plans, and the mutual influence between the actual fulfillment rate of stock repurchase plans and the degree of earnings management. From the perspective of earnings management behavior, this paper also analyzes the actual fulfillment rate, and discusses the information asymmetry, firms may carry out earnings management before stock repurchases, to mislead the investors into believing the prettified financial statements, to induce the investors to invest, and convey false signals to the market. The empirical results demonstrate that the cumulative abnormal return (CAR) resulting from true signals is higher than that resulting from false signals. Further, the phenomenon is more significant in the hi-tech industry than in traditional industries, and the firms with Purpose 3 (support the stock prices to maintain firm credit and shareholders' equity), a significant, positive abnormal return is observed on the day before and the day after the announcement day. In bullish periods, abnormal returns are not significant; in bearish periods, a significant, positive abnormal return is observed. These findings are applicable not only to the research samples but also to the samples when the extreme values are removed. Therefore, the empirical results are still robust.
Author | : Larry York Dann |
Publisher | : |
Total Pages | : 366 |
Release | : 1980 |
Genre | : Stocks |
ISBN | : |
Download The Effect of Common Stock Repurchase on Securityholder Returns Book in PDF, ePub and Kindle
Author | : George W. Fenn |
Publisher | : |
Total Pages | : 38 |
Release | : 1998 |
Genre | : Corporate reorganizations |
ISBN | : |
Download Good News and Bad News about Share Repurchases Book in PDF, ePub and Kindle
Author | : David Ikenberry |
Publisher | : |
Total Pages | : 48 |
Release | : 1994 |
Genre | : Corporations |
ISBN | : |
Download Market Underreaction to Open Market Share Repurchases Book in PDF, ePub and Kindle
We examine long-run firm performance following open market share repurchase announcements which occurred during the period 1980 to 1990. We find that the average abnormal four-year buy-and-hold return measured after the initial announcement is 12.1 percent. For `value' stocks, companies more likely to be repurchasing shares because of undervaluation, the average abnormal return is 45.3 percent. For repurchases announced by `glamour' stocks where undervaluation is less likely to be an important motive, no positive drift in abnormal returns is observed. Thus, at least with respect to value stocks, the market errs in its initial response and appears to ignore much of the information conveyed through repurchase announcements.