The Announcement Effects of Restricted Open Market Share Repurchases: Experience from Taiwan

Miawjane Chen (), Chao-Liang Chen () and Wan-Hsiu Cheng ()
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Miawjane Chen: Department of Accounting, Tamkang University, Tamsui 251, Taiwan, ROC;
Chao-Liang Chen: Department of Economics, Tamkang University, Tamsui 251, Taiwan, ROC
Wan-Hsiu Cheng: Department of Finance, Taichung Healthcare and Management University, Wefeng 413, Taiwan, ROC

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2004, vol. 07, issue 03, 335-354

Abstract: In this paper we empirically examine the effects of 451 restricted share repurchase announcements in Taiwan. Their 3-day cumulative abnormal returns are all significantly positive for different purposes and Tobin's qs. However, there is no significant difference in abnormal returns for different repurchasing purposes. This indicates that mandating a purpose is not really an effective tool for limiting managerial choice. Moreover, when the related variables are controlled, the other empirical results we conducted indicate that, at least in Taiwan, the traditional signaling hypothesis and the free cash flow hypothesis can function simultaneously to explain the effects of the restricted repurchase announcements.

Keywords: Restricted open market share repurchases; traditional signaling hypothesis; free cash flow hypothesis; Taiwan (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S0219091504000147

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