The Intra-Industry Effect of Share Repurchase Deregulation: Evidence from Taiwan

Shao-Chi Chang (), Jung-Ho Lai and Chen-Hsiang Yu
Additional contact information
Shao-Chi Chang: Institute of International Business, National Cheng Kung University, No. 1 University Rd., Tainan, Taiwan, R.O.C.
Jung-Ho Lai: Southern Taiwan University of Technology, Taiwan, R.O.C.
Chen-Hsiang Yu: National Cheng Kung University, Taiwan, R.O.C.

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2005, vol. 08, issue 02, 251-277

Abstract: Share repurchases were deregulated in Taiwan in 2000. The regulatory provisions and the government's stated aim of market stabilization provide a setting in which share repurchases are exclusively motivated by undervaluation. This study investigates if deregulation of share repurchases is an effective method of market stabilization by investigating the intra-industry effects of repurchase deregulation in Taiwan. We find that repurchasing firms and their corresponding rivals both experience strong value creation upon the repurchase announcements. The evidence suggests that the intra-industry effect of share repurchases is negatively associated with rivals' firm size, and positively associated with the announcing firm's abnormal return, the size of share repurchases and the similarity of business operation between rivals and repurchasing firms. These findings hold even after taking into account other effects that could influence the valuation of the rival firms.

Keywords: Share repurchase; competitive effect; contagion effect (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219091505000361
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:rpbfmp:v:08:y:2005:i:02:n:s0219091505000361

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219091505000361

Access Statistics for this article

Review of Pacific Basin Financial Markets and Policies (RPBFMP) is currently edited by Cheng-few Lee

More articles in Review of Pacific Basin Financial Markets and Policies (RPBFMP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().