Asymmetric Information, Financial Reporting, and Open-Market Share Repurchases

Matthew T. Billett and Miaomiao Yu

Journal of Financial and Quantitative Analysis, 2016, vol. 51, issue 4, 1165-1192

Abstract: We explore the link between open-market share repurchases (OMRs) and asymmetric information based on financial reporting quality and find that opaque firms experience positive abnormal returns of twice the magnitude of those of transparent firms. These significant differences remain after controlling for governance, earnings management, and firm characteristics. We document significantly positive long-run postannouncement returns for opaque firms, but not for transparent firms. We find that takeover activity and premiums rise with repurchase activity by opaque firms, which may explain some of the wealth effects. Our results suggest that asymmetric information plays an important role in the wealth effects around OMRs.

Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

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:cup:jfinqa:v:51:y:2016:i:04:p:1165-1192_00

Access Statistics for this article

More articles in Journal of Financial and Quantitative Analysis from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().