Jakob, Sascha; Valta, Philip (2023). What do market participants learn from share repurchases? Evidence from a return decomposition (In Press). Journal of Corporate Finance Elsevier
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This paper analyzes cash flow and cost of capital dynamics around share repurchase announcements of publicly traded US firms by decomposing stock returns into news related to cash flows and discount rates. After repurchase announcements, the cost of capital decreases significantly, while cash flows do not change. The decrease in the cost of capital is largest for firms that appear underpriced. These firms also experience the highest long-term returns after repurchase announcements. The findings suggest that market participants learn about a temporary overestimation of the cost of capital when firms announce share repurchases.
Item Type: |
Journal Article (Original Article) |
|---|---|
Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute of Financial Management |
UniBE Contributor: |
Jakob, Sascha, Valta, Philip |
Subjects: |
600 Technology > 650 Management & public relations |
ISSN: |
0929-1199 |
Publisher: |
Elsevier |
Funders: |
[42] Schweizerischer Nationalfonds |
Language: |
English |
Submitter: |
Karin Dolder |
Date Deposited: |
12 Jul 2023 11:01 |
Last Modified: |
12 Jul 2023 11:01 |
Uncontrolled Keywords: |
Share repurchases, Return Decomposition, Cost of Capital, Buyback Anomaly |
BORIS DOI: |
10.48350/184714 |
URI: |
https://boris.unibe.ch/id/eprint/184714 |
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