Stock Repurchases in Canada: Performance and Strategic Trading / David Ikenberry, Josef Lakonishok, Theo Vermaelen.

Format:

Book

Author/Creator:

Ikenberry, David.

Contributor:

National Bureau of Economic Research.

Lakonishok, Josef.

Vermaelen, Theo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7325.

NBER working paper series no. w7325

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Stock Repurchases in Canada

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Summary:

During the 1980s, U.S. firms that announced stock repurchase programs earned favorable long-run returns. Recently, concerns have been raised regarding the robustness of these findings. This comes at a time of explosive worldwide growth in the adoption of repurchase programs. This study provides out-of-sample evidence for 1,060 Canadian repurchase programs announced between 1989 and 1997. As in the U.S., the Canadian stock market seems to discount the information contained in repurchase announcements. Value stocks announcing repurchase programs have particularly favorable returns. Canadian law requires companies to report how many shares they repurchase on a monthly basis. We find that managers are sensitive to mispricing as completion rates are higher in cases where undervaluation may be a more important factor. Moreover, trades are linked to price movements; managers buy more shares when prices fall and reduce their buying when prices rise.

Notes:

Print version record

August 1999.