The effect of asymmetric information disappears: Evidence in share repurchases and market efficiency

Chien-Chiang Lee (), Bokyung Park and Chih-Wei Wang

Finance Research Letters, 2023, vol. 56, issue C

Abstract: This article aims to measure the wealth effect centered on stock repurchase announcements in U.S. companies and combine it with the concept of market efficiency, which means that information can be fully disclosed and circulated. We find that the higher the market efficiency, the lower the information asymmetry between internal managers and external investors and the lower the company opacity, resulting in the disappearance of abnormal returns after stock repurchases. Furthermore, we show that when market uncertainty decreases, the lower the information asymmetry opacity, the lower the abnormal returns after stock repurchases. Our findings have important policy implications for governments and investors.

Keywords: Stock repurchase; Market efficiency; Information asymmetric; Market uncertainty (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:56:y:2023:i:c:s1544612323004634

DOI: 10.1016/j.frl.2023.104091

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