Actual share repurchases, timing and liquidity

Hamon, Jacques; Ginglinger, Edith

Hamon, Jacques; Ginglinger, Edith (2007), Actual share repurchases, timing and liquidity, Journal of Banking and Finance, 31, 3, p. 915-938. http://dx.doi.org/doi:10.1016/j.jbankfin.2006.07.006

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Type

Article accepté pour publication ou publié

Date

2007-03

Journal name

Journal of Banking and Finance

Volume

Number

Publisher

Elsevier

Pages

915-938

Abstract (EN)

Research on the impact of open market share repurchases has been hindered by the lack of data available on actual share repurchases in many countries, including the US. Using a previously unused database containing detailed information on 36,848 repurchases made by 352 French firms, we show that corporate share repurchases have a significant adverse effect on liquidity as measured by bid–ask spread or depth. Our results also indicate that share repurchases largely reflect contrarian trading rather than managerial timing ability.

Subjects / Keywords

Liquidity; Timing; Repurchase; Microstructure; Corporate; Finance; Euronext Paris

JEL

G35 - Payout Policy
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
G14 - Information and Market Efficiency; Event Studies; Insider Trading