Share Repurchases in New Zealand

Hardjo Koerniadi, Ming-Hua Liu and Alireza Tourani-Rad

A chapter in Issues in Corporate Governance and Finance, 2007, pp 481-498 from Emerald Group Publishing Limited

Abstract: In this paper, we investigate the New Zealand stock market reactions to both on-market and off-market share repurchase programmes for the period 1995–2004. Share repurchases have become more frequent in New Zealand in recent years, though the size and the number of repurchases are still small by international standards. The main reason appears to be the presence of the dividend imputation system which diminishes the tax consequences of cash dividends compared to capital gains. On the whole, we observe that the market reacts positively and significantly to the share repurchase announcements. The magnitude of average abnormal returns for the on- and the off-market repurchases on the announcement day are 3.25 and 3.12% respectively. We further observe the reasons companies undertake stock repurchase are consistent with the investment and free cash flows agency hypotheses.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afeczz:s1569-3732(07)12018-1

DOI: 10.1016/S1569-3732(07)12018-1

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