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EU regulation and open market share repurchases: New evidence

Angeliki Drousia, Athanasios Episcopos (), George Leledakis () and Emmanuil Pyrgiotakis

MPRA Paper from University Library of Munich, Germany

Abstract: This paper re-examines the impact of the EU Market Abuse Directive (MAD) on the market reaction around share repurchase announcements. We use a unique hand-collected dataset of firms listed on the Athens Stock Exchange, and we find evidence that contrasts with previous conclusions for large European economies. The implementation of MAD is followed by a significant improvement in announcement abnormal returns, an improvement which remains even when we control for several firm-specific factors, industry fixed effects, and potential endogeneity issues. We attribute our findings to cross-country differences in institutional framework and pre-MAD existing national laws. Collectively, our results support the notion that EU directives do not have a uniform effect across Member States. Thus, the impact of such reforms should also be examined in individual capital market studies.

Keywords: Share repurchases; Market Abuse Directive; safe harbor; signaling undervaluation. (search for similar items in EconPapers)
JEL-codes: G14 G15 G35 G38 (search for similar items in EconPapers)
Date: 2020-06-01
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