Testing the Real Option Hypothesis on the Declining Open-Market Repurchase Announcement Returns

David Ding, Hardjo Koerniadi () and Chandrasekhar Krishnamurti ()
Additional contact information
Hardjo Koerniadi: Faculty of Business, Economics and Law, Auckland University of Technology, Auckland 1142, New Zealand
Chandrasekhar Krishnamurti: UniSA Business, University of South Australia, Adelaide, South Australia 5001, Australia

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2020, vol. 23, issue 03, 1-15

Abstract: Recent studies report that open-market repurchase announcements have become less attractive to stock investors. This study documents that lower announcement returns are attributed to subsequent repurchase announcements, which have increased in number in recent years. Using the real-option-to-delay framework proposed by Ikenberry, D and T Vermaelen (1996). The option to repurchase stock. Financial Management, 25, 9–24, this study finds evidence consistent with decreasing value of the option to repurchase shares prior to subsequent open-market repurchase announcements. This explains the decreasing market reactions to such announcements.

Keywords: Open-market share repurchase; real option; cumulative announcement returns (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219091520500241
Access to full text is restricted to subscribers

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:wsi:rpbfmp:v:23:y:2020:i:03:n:s0219091520500241

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219091520500241

Access Statistics for this article

Review of Pacific Basin Financial Markets and Policies (RPBFMP) is currently edited by Cheng-few Lee

More articles in Review of Pacific Basin Financial Markets and Policies (RPBFMP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().