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NBER Working Papers and Publications
|August 1999||Stock Repurchases in Canada: Performance and Strategic Trading|
with Josef Lakonishok, Theo Vermaelen: w7325
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 ma...
Published: Journal of Finance (October 2000). citation courtesy of
|December 1994||Market Underreaction to Open Market Share Repurchases|
with Josef Lakonishok, Theo Vermaelen: w4965
We examine long-run firm performance following open market share repurchase announcements which occurred during the period 1980 to 1990. We find that the average abnormal four-year buy-and-hold return measured after the initial announcement is 12.1 percent. For `value' stocks, companies more likely to be repurchasing shares because of undervaluation, the average abnormal return is 45.3 percent. For repurchases announced by `glamour' stocks where undervaluation is less likely to be an important motive, no positive drift in abnormal returns is observed. Thus, at least with respect to value stocks, the market errs in its initial response and appears to ignore much of the information conveyed through repurchase announcements.
Published: Journal of Financial Economics, Oct-Nov 1995, vol 39, no 2 and 3, pp 181-20 8. citation courtesy of