Graduation Year

2005

Document Type

Dissertation

Degree

Ph.D.

Degree Granting Department

Business Administration

Major Professor

Jianping Qi.

Keywords

Agency, Executive compensation, Stock options, Acquisitions, Method of payment, Repurchase

Abstract

Researchers have consistently shown that a firms repurchase announcement is met with positive abnormal stock price return reactions. Open-market repurchases are extremely flexible, non-committal and non-punitive; thus, it is puzzling that the mere announcement of an open-market repurchase will likely increase a firms stock price. I propose to disentangle a firms choice to repurchase its stock to determine when a repurchase announcement is good news for shareholders and when the announcement is not. I find that the purpose of the repurchase announcement matters. At the announcement date, managers intention of avoiding dilution is significantly negative and enhancing shareholder value is significantly positive, as expected.

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