The effect of asymmetric information disappears: Evidence in share repurchases and market efficiency
Journal
Finance Research Letters
Journal Volume
56
Start Page
104091
ISSN
1544-6123
Date Issued
2023-09
Author(s)
Abstract
This article aims to measure the wealth effect centered on stock repurchase announcements in U.S. companies and combine it with the concept of market efficiency, which means that information can be fully disclosed and circulated. We find that the higher the market efficiency, the lower the information asymmetry between internal managers and external investors and the lower the company opacity, resulting in the disappearance of abnormal returns after stock repurchases. Furthermore, we show that when market uncertainty decreases, the lower the information asymmetry opacity, the lower the abnormal returns after stock repurchases. Our findings have important policy implications for governments and investors.
Subjects
Information asymmetric
Market efficiency
Market uncertainty
Stock repurchase
Publisher
Elsevier BV
Type
journal article