We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
The Market Reaction to Repurchase Announcements.
- Authors
Sodhi, Adhiraj; Mateus, Cesario; Mateus, Irina; Stojanovic, Aleksandar
- Abstract
This paper investigates the drivers of the market's reaction to share repurchase announcements in the UK and the related abnormality in stock performance. It uniquely captures the impact of globalisation in tandem with a variety of firm-level and macro-level determinants. We undertake multivariate OLS regression to test the determinants of the market's reaction and find a negative influence when repurchases are tax-friendlier than dividends if there is high debt exposure and economic globalisation is rising, with a positive influence when the company has a history of distributing above average dividends. To quantify the short-term price abnormality, we employ event study analysis, and the findings compute positive (insignificant) stock price abnormality for nonfinancial (financial) firms. For long-term stock price abnormality, we compare against the FTSE 100 by computing annual geometric stock performances. The findings indicate a negative (insignificant) stock price abnormality for nonfinancial (financial) firms. The results can aid corporate management in improving repurchase timing, aid in the decision making of financial practitioners when trading or investing in repurchasing firms, and assist policymakers in mapping more efficient fiscal and cross-market trade frameworks.
- Subjects
UNITED Kingdom; FINANCIAL market reaction; STOCK repurchasing; INDUSTRIAL management; ECONOMIC globalization; ABNORMAL returns; PRICES; CORPORATE history
- Publication
Journal of Risk & Financial Management, 2023, Vol 16, Issue 10, p443
- ISSN
1911-8066
- Publication type
Article
- DOI
10.3390/jrfm16100443