Can firms time the market? Evidence using own stock transactions

Dinis Santos () and Paulo Gama ()
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Dinis Santos: Faculty of Economics of the University of Coimbra
Paulo Gama: Faculty of Economics of the University of Coimbra

No 5608038, Proceedings of Business and Management Conferences from International Institute of Social and Economic Sciences

Abstract: Can firms time the market? This paper uses hand collected data on 37997 own stock transactions from 2005 to 2015 of Euronext Lisbon listed companies to detect market timing for selling and buying transactions. Following Dittmar and Field (2015) the paper uses relative prices to ascertain the relative performance of own stock transactions. Results show that firms can time both repurchases as well as resales. Firms repurchase (resell) at lower (higher) prices than those prevailing in the market. Moreover, market timing ability proves to be higher after the bailout period and to be influenced by the own stock trading frequency. Trading on the open market allows for increased timing ability for own stock repurchasing and reselling activity. Finally, results show seasonality both in repurchases and resales performance.

Keywords: Repurchases; Reselling; Own Stock; Opportunistic Behavior; Market Timing; Own Stock Transaction Performance; Repurchase; Resale (search for similar items in EconPapers)
JEL-codes: G14 G15 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2017-07
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Published in Proceedings of the Proceedings of the 6th Business & Management Conference, Geneva, Jul 2017, pages 180-199

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Persistent link: https://EconPapers.repec.org/RePEc:sek:ibmpro:5608038

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