The optimal timing of open market stock repurchases

Andreas Krause, Chih-Chen Hsu

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Using a continuous-time real options approach we determine the conditions under which a value-maximizing company would conduct an open market stock repurchase to exploit the undervaluation of shares. We find the optimal timing of such repurchases as well as the optimal amount a company should repurchase and analyse how it depends on market parameters. Obtaining the announcement returns from the authorisation of stock repurchases from our model allows us to derive testable empirical implications.
Original languageEnglish
Pages (from-to)776-785
JournalEmerging Markets Finance and Trade
Volume52
Issue number4
Early online date8 Jan 2016
DOIs
Publication statusPublished - 2016

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Repurchase
Optimal timing
Stock repurchases
Continuous time
Authorization
Undervaluation
Announcement returns
Real options

Cite this

The optimal timing of open market stock repurchases. / Krause, Andreas; Hsu, Chih-Chen.

In: Emerging Markets Finance and Trade, Vol. 52, No. 4, 2016, p. 776-785.

Research output: Contribution to journalArticle

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