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Article: Open-market repurchase announcements and stock price behavior in inefficient markets.
- Article from:
- Financial Management
- Article date:
- September 22, 2002
- Author:
CopyrightCOPYRIGHT 2002 Financial Management Association. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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I ask why a firm would choose to buy back its outstanding shares after the stock price goes up in response to an open-market repurchase announcement. I introduce the subject of market inefficiency and establish a signaling equilibrium that does not assume that an announcement of open-market repurchase represents a commitment. Since the firm can earn capital gains by buying its outstanding shares at a bargain price, it has a strong incentive to execute stock repurchases even after it announces repurchase intention. Empirically, my model predicts positive long-run stock return performance and positive announcement effects following open-market repurchase announcements.
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Related newspaper, magazine, and journal articles:
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Article: McDonald and Company Investments Inc. to continue open ...
PR Newswire;
March 20, 1989 ;
482 words
... ... MCDONALD & COMPANY INVESTMENTS, INC. TO CONTINUE OPEN MARKET REPURCHASE PROGRAM CLEVELAND, March 20 /PRNewswire/ -- McDonald ... board of directors has approved the continuation of an open market repurchase program. The program originally announced in July, 1987 ...
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