The Persistence of Long-Run Abnormal Returns Following Stock Repurchases and Offerings

Fangjian Fu () and Sheng Huang ()
Additional contact information
Fangjian Fu: Lee Kong Chian School of Business, Singapore Management University, Singapore 178899
Sheng Huang: Lee Kong Chian School of Business, Singapore Management University, Singapore 178899

Management Science, 2016, vol. 62, issue 4, 964-984

Abstract: The long-run abnormal returns following both stock repurchases and seasoned equity offerings disappear for the events in 2003–2012. The disappearance is associated with the changing market environment: increased institutional investment, decreased trading costs, improved liquidity, and enhanced regulations on corporate governance and information disclosure. In response to the more efficient pricing of stocks, firms become less opportunistic in stock repurchases and offerings. Recent events of stock repurchases and offerings are motivated more by business-operating reasons than to exploit mispricing. Both external market factors and internal firm factors contribute to the disappearance of the postevent abnormal returns. Our findings on the recent events contrast with those of earlier studies and shed light on how the changing market environment affects both asset pricing and corporate behavior. This paper was accepted by Wei Jiang, finance.

Keywords: long-run abnormal returns; market efficiency; stock repurchases; seasoned equity offerings; feedback effect of financial markets (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2015.2150 (application/pdf)

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:inm:ormnsc:v:62:y:2016:i:4:p:964-984

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().