Buying High and Selling Low: Stock Repurchases and Persistent Asymmetric Information

• 成果类型: Article
• 署名作者: Bond, Philip; Zhong, Hongda
• 署名单位: University of Washington; University of Washington Seattle; University of London; London School Economics & Political Science
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhw005
• 发表日期: 2016
• 页码: 1409
• 关键词: SHARE REPURCHASES; payout policy; Optimal investment; adverse selection; Dividend policy; EQUITY ISSUES; MARKET; price; DYNAMICS; signals

摘要

Share prices generally fall when a firm announces a seasoned equity offering (SEO). A standard explanation is that an SEO communicates negative information to investors. We show that if repeated capital market transactions are possible, this same asymmetry of information between firms and investors implies that some firms also repurchase shares in equilibrium. A subset of these firms directly profit from repurchases, while other firms repurchase in order to improve the terms of a subsequent SEO. The possibility of repurchases reduces both SEOs and investment. Overall, our analysis highlights the importance of analyzing SEOs and repurchases in a unified framework.