The Credibility of Open Market Share Repurchase Signaling

被引:80
作者
Babenko, Ilona [1 ]
Tserlukevich, Yuri [1 ]
Vedrashko, Alexander [2 ]
机构
[1] Arizona State Univ, Carey Sch Business, Tempe, AZ 85287 USA
[2] Simon Fraser Univ, Beedie Sch Business, Burnaby, BC V5A 1S6, Canada
关键词
FREE CASH-FLOW; TENDER OFFERS; INFORMATION-CONTENT; STOCK REPURCHASES; PAYOUT POLICY; ANNOUNCEMENTS; DIVIDENDS; COMPENSATION; DECISIONS; RETURNS;
D O I
10.1017/S0022109012000312
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
Open market share repurchase announcements are commonly associated with equity undervaluation, but their signal about firm value can often be misleading. We conjecture that executives who buy shares of their firm before an announcement add credibility to the undervaluation signal. Consistent with this hypothesis, we find that announcement returns are positively related to past insider purchases, especially for firms that are priced less efficiently. Firms whose insiders bought more shares are also more likely to complete their repurchase plans. Finally, we find that insider purchases predict post-announcement stock returns.
引用
收藏
页码:1059 / 1088
页数:30
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