Do firms buy their stock at bargain prices? Evidence from actual stock repurchase disclosure

Azi Ben-Rephael, Jacob Oded and Avi Wohl

No 2011/17, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: We use new data from SEC filings to investigate how S&P 500 firms execute their open market repurchase programs. We find that smaller S&P 500 firms repurchase less frequently than larger firms, and at a price which is significantly lower than the average market price. Their repurchase activity is followed by a positive and significant abnormal return which lasts up to three months after the repurchase. These findings do not hold for large S&P 500 firms. Our interpretation is that small firms repurchase strategically, whereas the repurchase activity of large firms is more focused on the disbursement of free cash.

Keywords: Stock Repurchases; Stock Buybacks; Payout Policy; Timing; Bid-Ask Spread; Liquidity (search for similar items in EconPapers)
JEL-codes: G14 G30 G35 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:201117

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