The information content of share repurchase programs

• 成果类型: Article
• 署名作者: Grullon, G; Michaely, R
• 署名单位: Rice University; Cornell University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2004.00645.x
• 发表日期: 2004
• 页码: 651-680
• 关键词: ABNORMAL OPERATING PERFORMANCE; STOCK REPURCHASES; Dividend policy; tender offers; EARNINGS FORECASTS; Optimal investment; AGENCY COSTS; RISK; underreaction; returns

摘要

Contrary to the implications of many payout theories, we find that announcements of open-market share repurchase programs are not followed by an increase in operating performance. However, we find that repurchasing firms experience a significant reduction in systematic risk and cost of capital relative to non-repurchasing firms. Further, consistent with the free cash-flow hypothesis, we find that the market reaction to share repurchase announcements is more positive among those firms that are more likely to overinvest. Finally, we find evidence to indicate that investors under-react to repurchase announcements because they initially underestimate the decline in cost of capital.