Do firms buy their stock at bargain prices? : Evidence from actual stock repurchase disclosure
- We use new data from SEC filings to investigate how S&P 500 firms execute their open market repurchase programs. We find that smaller S&P 500 firms repurchase less frequently than larger firms, and at a price which is significantly lower than the average market price. Their repurchase activity is followed by a positive and significant abnormal return which lasts up to three months after the repurchase. These findings do not hold for large S&P 500 firms. Our interpretation is that small firms repurchase strategically, whereas the repurchase activity of large firms is more focused on the disbursement of free cash. JEL Classification: G14, G30, G35 Keywords: Stock Repurchases, Stock Buybacks, Payout Policy, Timing, Bid-Ask Spread, Liquidity
Author: | Azi Ben-Rephael, Jacob Oded, Avi Wohl |
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URN: | urn:nbn:de:hebis:30-115334 |
Parent Title (German): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2011,17 |
Series (Serial Number): | CFS working paper series (2011, 17) |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2011 |
Year of first Publication: | 2011 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2011/09/14 |
Tag: | bid-ask spread; liquidity; payout policy; stock buybacks; stock repurchases; timing |
Issue: | Version January 11, 2011 |
Page Number: | 59 |
HeBIS-PPN: | 277073146 |
Institutes: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Sammlungen: | Universitätspublikationen |
Licence (German): | Deutsches Urheberrecht |