The effects of executive compensation and outside monitoring on firms’ pre-repurchase disclosure behavior and post-repurchase performance

Sheng-Syan Chen, Robin K. Chou and Yun-Chi Lee ()
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Sheng-Syan Chen: National Chengchi University
Robin K. Chou: National Chengchi University
Yun-Chi Lee: Ming Chuan University

Review of Quantitative Finance and Accounting, 2020, vol. 54, issue 1, No 5, 158 pages

Abstract: Abstract We show that corporate governance mechanisms play an important role in controlling managers’ opportunistic behavior. Low executive equity compensation and a high intensity of outside monitoring help to discourage undesirable self-interested disclosure decisions by management before share repurchases. Corporate governance mechanisms also have a significant impact on long-run abnormal stock prices and operating performance. Firms that manipulate pre-repurchase disclosures experience positive long-term abnormal stock returns. However, we do not find that these firms experience positive long-run operating performance. Corporate governance mechanisms significantly attenuate the tendency toward negative pre-repurchase disclosures and their effects on stock prices and operating performance.

Keywords: Corporate governance; Repurchase; Voluntary disclosure; Long-term performance (search for similar items in EconPapers)
JEL-codes: G14 G34 G35 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s11156-018-00785-1

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