PAGE 20 15 Ikenberry, Lakonishok and Vermaelen find that about 25 percent of firms never purchase any of their shares and less than 5 percen t of firms fully complete their repurchase programs overall the mean completion rate is Stephens and Weisbach find that between 46 percent and 75 percent of firms complete their repurchase plans within one year and 74 per cent and 82 percent of shares of all firms in the sample are actually acquired.
A demonstration by Mauboussinshown in Appendix A, points in the same direction. So, during the s as executive compensation increased in the form of options25 firms repurchased their stock at increasing prices.
To put it in a nutshell, undervaluation seems to be an important reason to pursue a buyback for long-term shareholders. Essay writing for upsr japanese history essay my personal mission statement essay georgia southern university dissertation information essay ideas. Meanwhile, previous literature suggests that share repurchase announcement is a credible and efficient way in mitigating information asymmetry, with market reaction to share repurchase announcements Repurchases announcements thesis more positive for those firms subject to severe information asymmetry.
Thus, a high market-to-book often referred to as a glamour stock would suggest a negative correlation with repurchases. Concluding, many other researchers have investigated the relationship between corp orate value and the allocation PAGE 30 25 of shares among corporate insiders and while results differ there is a consensus that allocation of equity ownership matters.
Furthermore, Yermack finds 20 According to generally accepted acc ounting standards firms only report the difference of option grant over the current market price as an expense during the year granted.
Empirical support for the undervaluation theory is given by Stephens and Weisbach Furthermore, we may find the repurchase announcement to be non-positive because options may serve to exacerbate the entrenchment problem.
Thus, while repurchases increased during the s, there was an increasing reliance on stock options to compensate top managers. Doctoral thesis, Durham University.
The cross-sectional model will be carried out through SAS. His findings are supported by Chan et al.
Companies face intense pressure from activist shareholders, institutional investors, the government, and the media to put their cash to good use. Repurchasing stocks is another way for managers to distribute money to shareholders, thus it plays an equivalent role as dividend payments.
Ofek and Yermack argue that alt hough boards intend for stock options to boost the ownership positions of managers, there is no assurance that executive will behave accordingly. This is confirmed by Stephens and Weisbachwho state that there is nearly no penalty for not buying back the entire amount of shares announced or not repurchasing again in the future.
Percentage of repurchasing firms by German indices cf. The authors state that if the buyback is paid for with funds that would alternatively be invested in projects with a negative NPV, the value of the company rises. Hypothesis 2 The abnormal long-run returns will be less positive or non-positive for firms announcing repurchases for opportunistic reasons such as an acquisition, counteracting dilution effects, and the c overing of options as compared to the cumulative abnormal returns for all other repurchase motives.There is a weird benefit, to our special situation investment thesis, to the convoluted “repurchases” through a controlled hedge fund: The company (actually the fund) has to file a Form 4 within two days of any purchase; this provides greater visibility into whether the.
This thesis investigates open market repurchase announcements by Toronto Stock Exchange (TSX) listed firms.
First, I develop a comprehensive database of normal course issuer bids (NCIB) and report descriptive data on repurchasing activity between and Repurchase Program Announcements by James Matthew Moore A thesis presented to the University of Waterloo in fulfillment of the thesis requirement for the degree of repurchases literature by demonstrating that firms with low trading volume are more likely to initiate.
announcement of starting the buybacks and actual buys.
In the first phase of this study is analysed the collected data of the reasons Finnish firms have named for repurchases. share repurchases has found a positive reaction to the repurchase announcements, as demonstrated by the existence of cumulative abnormal returns surrounding the announcement and over the subsequent repurchase period.
Short-term returns following open-market share repurchase announcements -An empirical study on the Danish market The major purpose of this thesis is to analyze if companies listed on the Copenhagen open-market share repurchase announcements create abnormal returns on the Danish.Download