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The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms
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| Zeitschriftentitel: | International Journal of Economics and Finance |
|---|---|
| Personen und Körperschaften: | , |
| In: | International Journal of Economics and Finance, 10, 2018, 8, S. 117 |
| Format: | E-Article |
| Sprache: | Unbestimmt |
| veröffentlicht: |
Canadian Center of Science and Education
|
| Schlagwörter: |
| author_facet |
Gupta, Jyoti Wagner, Florian Gupta, Jyoti Wagner, Florian |
|---|---|
| author |
Gupta, Jyoti Wagner, Florian |
| spellingShingle |
Gupta, Jyoti Wagner, Florian International Journal of Economics and Finance The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms General Medicine |
| author_sort |
gupta, jyoti |
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Gupta, Jyoti Wagner, Florian 1916-9728 1916-971X Canadian Center of Science and Education General Medicine http://dx.doi.org/10.5539/ijef.v10n8p117 <jats:p>Using a comprehensive sample of 1830 open-market repurchases of 15 European countries encompassing the period from 1998 until 2013, we analyzed the magnitude and determinants of the share price reaction on announcement. Our results indicate that buyback announcements in Europe lead on average to a significantly positive abnormal return of 0.92% on announcement day, however, decreasing in firm size and announcement frequency. Additionally, our findings show that the market does not particularly greet the distribution of excess cash to shareholders, but rather when companies take advantage of undervalued stock as market-to-book values are inversely related to announcement returns. Looking at the companies’ leverage ratios, the motive of capital structure optimization cannot be supported by the empirical findings. Lastly, with respect to managerial market timing ability we could not observe that buybacks are following a period of share price underperformance, concluding that managers are not able to time the implementation of buyback programs.</jats:p> The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms International Journal of Economics and Finance |
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International Journal of Economics and Finance |
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| title |
The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| title_unstemmed |
The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| title_full |
The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
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The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
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The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| title_short |
The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| title_sort |
the announcement effect of open-market share buybacks: the case for european firms |
| topic |
General Medicine |
| url |
http://dx.doi.org/10.5539/ijef.v10n8p117 |
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2018 |
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117 |
| description |
<jats:p>Using a comprehensive sample of 1830 open-market repurchases of 15 European countries encompassing the period from 1998 until 2013, we analyzed the magnitude and determinants of the share price reaction on announcement. Our results indicate that buyback announcements in Europe lead on average to a significantly positive abnormal return of 0.92% on announcement day, however, decreasing in firm size and announcement frequency. Additionally, our findings show that the market does not particularly greet the distribution of excess cash to shareholders, but rather when companies take advantage of undervalued stock as market-to-book values are inversely related to announcement returns. Looking at the companies’ leverage ratios, the motive of capital structure optimization cannot be supported by the empirical findings. Lastly, with respect to managerial market timing ability we could not observe that buybacks are following a period of share price underperformance, concluding that managers are not able to time the implementation of buyback programs.</jats:p> |
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| author | Gupta, Jyoti, Wagner, Florian |
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| description | <jats:p>Using a comprehensive sample of 1830 open-market repurchases of 15 European countries encompassing the period from 1998 until 2013, we analyzed the magnitude and determinants of the share price reaction on announcement. Our results indicate that buyback announcements in Europe lead on average to a significantly positive abnormal return of 0.92% on announcement day, however, decreasing in firm size and announcement frequency. Additionally, our findings show that the market does not particularly greet the distribution of excess cash to shareholders, but rather when companies take advantage of undervalued stock as market-to-book values are inversely related to announcement returns. Looking at the companies’ leverage ratios, the motive of capital structure optimization cannot be supported by the empirical findings. Lastly, with respect to managerial market timing ability we could not observe that buybacks are following a period of share price underperformance, concluding that managers are not able to time the implementation of buyback programs.</jats:p> |
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| series | International Journal of Economics and Finance |
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| spelling | Gupta, Jyoti Wagner, Florian 1916-9728 1916-971X Canadian Center of Science and Education General Medicine http://dx.doi.org/10.5539/ijef.v10n8p117 <jats:p>Using a comprehensive sample of 1830 open-market repurchases of 15 European countries encompassing the period from 1998 until 2013, we analyzed the magnitude and determinants of the share price reaction on announcement. Our results indicate that buyback announcements in Europe lead on average to a significantly positive abnormal return of 0.92% on announcement day, however, decreasing in firm size and announcement frequency. Additionally, our findings show that the market does not particularly greet the distribution of excess cash to shareholders, but rather when companies take advantage of undervalued stock as market-to-book values are inversely related to announcement returns. Looking at the companies’ leverage ratios, the motive of capital structure optimization cannot be supported by the empirical findings. Lastly, with respect to managerial market timing ability we could not observe that buybacks are following a period of share price underperformance, concluding that managers are not able to time the implementation of buyback programs.</jats:p> The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms International Journal of Economics and Finance |
| spellingShingle | Gupta, Jyoti, Wagner, Florian, International Journal of Economics and Finance, The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms, General Medicine |
| title | The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| title_full | The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| title_fullStr | The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| title_full_unstemmed | The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| title_short | The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| title_sort | the announcement effect of open-market share buybacks: the case for european firms |
| title_unstemmed | The Announcement Effect of Open-Market Share Buybacks: The Case for European Firms |
| topic | General Medicine |
| url | http://dx.doi.org/10.5539/ijef.v10n8p117 |