Is the market underreacting or overreacting to open market share repurchases: a UK perspective
Crawford, I. and Wang, Zhiqi (2012) Is the market underreacting or overreacting to open market share repurchases: a UK perspective. Research in International Business and Finance 26 (1), pp. 26-46. ISSN 0275-5319.
Using UK open market repurchases, we reject the market underreaction hypothesis and the market overreaction hypothesis proposed by Ikenberry, Lakonishok and Vermaelen (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 two years following the announcement. It turns out that value firms repurchase over 6% more shares than glamour firms during the authorisation period.
|Keyword(s) / Subject(s):||Open market share repurchases, market underreaction or overreaction, long run abnormal returns|
|School:||Birkbeck Schools and Departments > School of Business, Economics & Informatics > Management|
|Date Deposited:||08 Jun 2011 14:10|
|Last Modified:||17 Apr 2013 12:20|
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