Do firms use share repurchases as a way to manipulate stock prices?
Date Issued
2005
Date
2005
Author(s)
DOI
en-US
Abstract
This paper investigates the motivation of open market share repurchases. A new aspect of the stock price manipulation is provided to shed lights on the source of open market share repurchases. We suggest repurchases with frequent high discretionary accruals being motivated by the stock price manipulation. Repurchase firms with high discretionary accruals tend to announce repurchases to boost up the stock prices. However, it mainly argues that repurchase firms with high discretionary accruals earn insignificant returns in the long run, which is against the undervaluation hypothesis. Other examinations such as operating performance, earnings surprise, analysts forecast and other results suggest that repurchase firms with high discretionary accruals are not motivated by traditional hypotheses. Therefore, these firms are likely to announce repurchases to boost up the stock price rather than other positive reasons.
Subjects
操控股票價格
庫藏股
長期績效
Discretionary accruals
Long run performance
Repurchases
Stock price manipulation
Type
thesis
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