Is Market Timing Good for Shareholders?

• 成果类型: Article
• 署名作者: Babenko, Ilona; Tserlukevich, Yuri; Wan, Pengcheng
• 署名单位: Arizona State University; Arizona State University-Tempe
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2019.3359
• 发表日期: 2020
• 页码: 3542-3560
• 关键词: Asymmetric information; Market timing; rational expectations; share turnover; share issuance and repurchases

摘要

Corporations often transact in their own mispriced stock. This activity, known as equity market timing, can generate substantial profits and increase the long-term stock price. We challenge a closely related popular view that market timing always benefits firm shareholders. Opportunistic financing maneuvers by a firm can negatively affect its un-informed stock owners because of adverse selection and the change in the firm's short-term price, whereas the long-term returns do not accumulate to departing stockholders. The negative effect of market timing on stockholders increases with the share turnover. Furthermore, the effect of timing is asymmetric: shareholders prefer that the firm corrects underpricing rather than overpricing. Our theory can be used to better interpret the observed stock issuance and repurchase activities of firms.