Bond repurchase objectives and the repurchase method choice

• 成果类型: Article
• 署名作者: Levy, Hagit; Shalev, Ron
• 署名单位: City University of New York (CUNY) System; Baruch College (CUNY); New York University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2016.09.003
• 发表日期: 2017
• 关键词: Stock repurchases; to-market; earnings; QUALITY; INFORMATION; management; VIOLATION; anomalies; returns; panacea

摘要

This study investigates how firm's bond repurchase objective affects its choice of repurchase method. Unlike tender offers, open-market repurchases are not pre-announced and buyer's identity is unknown to the seller. We provide evidence that firms are likely to repurchase on the open-market when bonds are mispriced and when firms seek to manage their financial reports, either to meet earnings targets or avert debt covenant violations. When firms seek to amend indenture terms, they prefer tender offers. We also find that firm's information quality affects the likelihood of mispricing exploitation behavior and that insiders buy firm's stocks around open-market repurchases. (C) 2016 Elsevier B.V. All rights reserved.