Does Prior Record Matter in the Wealth Effect of Open-Market Share Repurchase Announcements
Journal
International Review of Economics and Finance
Journal Issue
19
Pages
427-435
Date Issued
2010-06
Author(s)
Abstract
This study investigates whether prior experience of share repurchases matters in the market reactions to the subsequent repurchase announcements. Specifically, we study the prior record on actual buybacks and post-announcement stock performance. We find that upon the announcement of share repurchases, stock markets not only respond more positively to those made by firms that have better record on actual buyback following their previous repurchase plan announcements, but also experience a stronger reaction for announcing firms with better stock performance after prior repurchase announcements. These results hold even after controlling for other variables that are found important in influencing the market reactions to repurchase announcements. © 2009.
Type
journal article