Is the market underreacting or overreacting to open market share repurchases? A UK perspective

Ian Crawford, Zhiqi Wang

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Using UK open market repurchases, we reject the market underreaction hypothesis and the market overreaction hypothesis proposed by Ikenberry et al. (1995) and Peyer and Vermaelen (2009), respectively. The evidence suggests that the UK market reacts slowly to actual repurchases made by value firms. UK repurchases on average do not suffer from share undervaluation prior to the announcement. Value firms perform just as well as glamour firms during the authorisation period but outperform glamour firms significantly 2 years following the announcement. It turns out that value firms repurchase over 6% more shares than glamour firms during the authorisation period.
LanguageEnglish
Pages26-46
JournalResearch in International Business and Finance
Volume26
Issue number1
DOIs
StatusPublished - 1 Jan 2012

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Repurchase
Market share
Share repurchases
Firm value
Authorization
Announcement
Undervaluation
Underreaction
Overreaction

Cite this

Is the market underreacting or overreacting to open market share repurchases? A UK perspective. / Crawford, Ian; Wang, Zhiqi.

In: Research in International Business and Finance, Vol. 26, No. 1, 01.01.2012, p. 26-46.

Research output: Contribution to journalArticle

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