Does prior record matter in the wealth effect of open-market share repurchase announcements? |
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| Authors: | Shao-Chi Chang Sheng-Syan Chen Li-Yu Chen |
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| Institution: | 2. The College of Animal Science and Veterinary Medicine, Henan Agricultural University, Zhengzhou 450002, PR China;3. The China Conservation and Research Centre for the Giant Panda (CCRCGP), Bifengxia base, Sichuan 625007, PR China;1. Risk Return Consulting, 10 Ferncliff Road, Scarsdale, NY 10583, USA;2. Department of Economics and Finance, Bernard Baruch College, Zicklin School of Business, One Bernard Baruch Way, New York, NY 10010, USA;1. Department of International Business Administration, Wenzao Ursuline College of Languages, Taiwan, 900 Mintzu 1st Rd, Kaohsiung City 80793, Taiwan;2. Department of Risk Management and Insurance, National Kaohsiung First University of Science and Technology, Taiwan, 2 Jhuoyue Rd, Kaohsiung City 81164, Taiwan;3. College of Business Administration, University of Missouri-St. Louis, One University Blvd, St. Louis, MO 63121, USA;4. Department of Finance, Chang Jung Christian University, Taiwan, 396 Sec. 1, Changrong Rd, Tainan City, 71101, Taiwan |
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| Abstract: | This study investigates whether prior experience of share repurchases matters in the market reactions to the subsequent repurchase announcements. Specifically, we study the prior record on actual buybacks and post-announcement stock performance. We find that upon the announcement of share repurchases, stock markets not only respond more positively to those made by firms that have better record on actual buyback following their previous repurchase plan announcements, but also experience a stronger reaction for announcing firms with better stock performance after prior repurchase announcements. These results hold even after controlling for other variables that are found important in influencing the market reactions to repurchase announcements. |
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