The effectiveness of price-stabilizing share buybacks: Evidence from listed firms in Vietnam |
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| Institution: | 1. Paul and Virginia Engler College of Business, West Texas A&M University, Canyon, TX 79016, United States;2. Management Faculty, Dong A University, Danang 550000, Viet Nam;3. Paul and Virginia Engler College of Business, West Texas A&M University, United States;1. Energy Development and Environmental Protection Strategy Research Center, Jiangsu University, Zhenjiang 212013, Jiangsu, PR China;2. Department Of Mathematics, Shanghai University of Finance and Economics, Shanghai 200433, PR China;3. Energy Interdependence Behavior and Strategy Research Center, School of Mathematical Sciences, Nanjing Normal University, Nanjing 210046, Jiangsu, PR China;1. Nutrition Department, Dong A University, 33 Xo Viet Nghe Tinh, Hai Chau District, Danang, 550000, Viet Nam;2. Nutritional Epidemiology Institute and School of Public Health, Tianjin Medical University, 22 Qixiangtai Road, Heping District, Tianjin, 300070, China;3. Administration of Science Technology and Training, Vietnam Ministry of Health, Hanoi 15000, Viet Nam;1. Department of Finance, School of Business Administration, Northeastern University, No. 500, Zhihui Street, Shenyang 110167, PR China;2. School of Business, Hainan Tropical Ocean University, No. 1, Yucai Road, Sanya 572022, PR China |
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| Abstract: | The majority of share buybacks in Vietnam involve the sole stated purpose of price stabilization. Using a sample of repurchases announced in 2008–2016 and control firms based on propensity score matching, we find the Vietnamese repurchases to be effective in stabilizing prices and enhancing liquidity. Utilizing the special disclosure features in Vietnam that allow clearly-defined sub-windows of pre-trading, trading, and post-trading, we further examine the different mechanisms of market reactions and actual firm buyback transactions in the buyback process. We document significantly higher abnormal returns over the pre-trading window driven by market reactions, and improved liquidity and reduced volatility over the firm’s actual transaction window for the buyback firms. We also report a significant moderating effect of target shares announced and actual shares repurchased depending on the sub-window under examination. We do not find any evidence of effectiveness in the post-trading window or over a longer-term beyond the buyback period. |
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| Keywords: | Price stabilization Share buyback Emerging markets Vietnam |
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