Closing the value gap by the means of stock repurchase announcement – the case of Warsaw Stock Exchange

Tomasz Slonski and Bartosz Zawadzki
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Tomasz Slonski: Faculty of Management, Informatics and Finance, Wroclaw University of Economics, Poland
Bartosz Zawadzki: Faculty of Management, Informatics and Finance, Wroclaw University of Economics, Poland

Business and Economic Horizons (BEH), 2013, vol. 9, issue 3, 56-68

Abstract: This article shows that announcement of share repurchase programs on Polish market is used as a price catalyst when the spread between intrinsic and market value is large. The article presents determinants, conditions and results of 77 open market share repurchase programs conducted on Warsaw Stock Exchange (WSE) between 2005 and 2010. We find the behaviour of management boards of companies listed on WSE consistent with the market timing theory assumptions, as in most cases managers passed the information to the market without any additional economic costs. Investors who adopted the strategy to invest in undervalued stocks and hold the securities for 6 months realized a total return of 61.15% in the analyzed period.

Keywords: Share repurchase; event studies; market timing (search for similar items in EconPapers)
JEL-codes: G14 G35 (search for similar items in EconPapers)
Date: 2013
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