EconPapers    
Economics at your fingertips  
 

Market Timing in Open Market Bond Repurchases

Nadav Steinberg and Avi Wohl
Additional contact information
Avi Wohl: Tel-Aviv University

No 2022.15, Bank of Israel Working Papers from Bank of Israel

Abstract: Bond repurchases are widespread in the US and other markets but data limitations have thus far prevented market-timing analysis. We fill this gap using unique daily data from Israel and show that firms time the market in their actual open-market bond repurchases. Firms repurchase their bonds following a decline in bond prices. The disclosure of bond repurchases results in significantly positive abnormal returns on the repurchased bonds and is followed by a positive drift in subsequent 5 trading days. The market reaction to actual bond repurchases is timelier when conducted within a preannounced repurchase program, and the impact is stronger when the firm repurchases high-yield bonds. Insiders’ net purchases increase prior to bond repurchases, and the abnormal return following a bond repurchase tends to be higher when it is preceded by positive net insider purchases. The results lend support to the information motive for bond repurchases.

Keywords: Fixed income securities; Capital structure; Financial policy; Payout policy; Event studies; Information and disclosure (search for similar items in EconPapers)
Pages: 43 pages
Date: 2022-08
New Economics Papers: this item is included in nep-mst
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://boiwebrepec.azurefd.net/RePEc/boi/wpaper/WP_2022.15.pdf First Version, 2022 (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:boi:wpaper:2022.15

Access Statistics for this paper

More papers in Bank of Israel Working Papers from Bank of Israel Contact information at EDIRC.
Bibliographic data for series maintained by Yossi Yakhin ().

 
Page updated 2023-06-15
Handle: RePEc:boi:wpaper:2022.15