Share Repurchases and Stock Valuation Models

Stowe, John D.; McLeavey, Dennis W.; Pinto, Jerald E.

doi:10.3905/jpm.2009.35.4.170

Cited by 5 publications

(13 citation statements)

References 6 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The results prove that fluctuations in stock prices have a significant effect on the accuracy of stock price predictions. These results corroborate research that has been done previously by Brown (1983) and Stowe, McLeavey, and Pinto (2009). Evidence of the effect of stock price fluctuations on the precise prediction of these analysts into information that is very important for analysts and investors.…”

Section: Source: Run Results Using Statasupporting

confidence: 91%

The Effect of Accounting Information on Stock Price Predictions Through Fluctuation of Stock Price, Evidence From Indonesia

Tambun

Murwaningsari

Mayangsari

2018

Journal of Accounting, Business and Finance Research

View full text Add to dashboard Cite

This article describes the results of research on the effect of accounting information on the accuracy of analyst predictions, using stock price fluctuations as a mediation variable. Accounting information uses three measurements, i.e. changes in revenue, changes in net income before extraordinary (NIBE), and changes in debt. This accounting information is combined with market information such as stock price information. A sample of 54 issuers listed on the Indonesia Stock Exchange. The sample is selected using the purposive sampling method. The analytical method uses the ordinary least square estimation method with the data panel structure, to test for direct influence. For indirect effect test, used two least square methods with panel data structure. The tool that used in this analysis was Stata. The results show that changes in revenue have a significant impact on stock price fluctuations. Then, stock price fluctuations may mediate the effect of information on revenue changes on the precise prediction of analysts. This means that changes in revenue will be stronger influence on the accuracy of analyst predictions, if there is an increase in stock prices. For indirect influence, this study proves that changes in revenue affect the accuracy of analyst predictions, through fluctuations in stock prices.

show abstract

Section: Source: Run Results Using Statasupporting

confidence: 91%

The Effect of Accounting Information on Stock Price Predictions Through Fluctuation of Stock Price, Evidence From Indonesia

Tambun

Murwaningsari

Mayangsari

2018

Journal of Accounting, Business and Finance Research

View full text Add to dashboard Cite

show abstract

“…However, a strategic intent behind share repurchases in the Indian capital market, factors that affect lower returns during post-buyback period, which deserve future research. In fact, most academic literature on share repurchases does not focus on valuation, thus focusing on institutional features and other important economic issues, such as, agency effect and taxation effects of post-repurchases are some of the thrust areas for doing further research (for example, Stowe et al, 2009). Furthermore, scholars can investigate the essential areas in corporate finance, for example, regarding stock signalling which is the most powerful financial restructuring announcement from a given set of activities: accounting disclosures, buybacks, dividends, mergers, acquisitions and takeovers.…”

Section: Discussionmentioning

confidence: 99%

“…Generally, in a theory, buybacks are guided by the intrinsic value of the share, which is privileged than the market price, when management purses the shares to be undervalued (Hung & Chen, 2010). However, for some companies, total cash distributions (dividends and repurchases) may be a more practical measure of return to investors than dividends alone (Stowe et al, 2009). 5…”

Section: Review Of Earlier Contributionsmentioning

confidence: 99%

“…Share repurchase activity has developed radically and then fetched a major payment method since many years in the finance education, research and practice (for example, Hung & Chen, 2010; Stowe, McLeavey & Pinto, 2009). In our approach, if share buyback causes signalling effect, is it beneficial to the shareholders, or also causes double signalling power on the price-to-earnings (hereinafter, P/E) ratio?…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Share Repurchases, Signalling Effect and Implications for Corporate Governance: Evidence from India

Reddy

Nangia

Agrawal

2013

Asia-Pacific Journal of Management Research and Innovation

View full text Add to dashboard Cite

It is worth mentioning that a great deal of financial liberalization, privatization and internationalization policies in emerging economies have significantly increased the corporate restructuring activities like mergers, acquisitions, share repurchases, and stock splits, among others. Indeed, the activity that is investigated in this paper is 'share repurchases' and its effect on stock returns and price-to-earnings (P/E) ratio. More deeply, this paper will answer the research question-does a share repurchase offer abnormal returns around the announcement? Thus, it is performed in one of the Asian emerging markets-India. To do so, we use event-study method to examine abnormal returns and P/E signaling around the announcement of 64 share repurchases, announced during 2008-2009. It is found that stock performance does not adequate, and notices lower as well as negative earnings during post-buyback period. Briefly, we conclude that share repurchases assure short-term returns, and observe lower P/E compared to pre-buyback period. In addition, we show some interesting results that derived from industrial and services sectors. The outcome of this paper would help financial analysts, financial advisors, corporate enterprises and regulatory bodies in designing policies on earnings distribution, managerial incentives, takeovers, and so forth of regulatory aspects.

show abstract

“…ROE is defined as the income produced on equity capital and is calculated by dividing net income by the book value of shareholder's equity (Damodaran, 2007). It is a widely used accounting measure of companies' financial performance in making investment decisions (Stowe, Robinson, Pinto & McLeavey, 2002). In view of this body of literature, we adopt ROE as our measure of corporate performance in this study.…”

Section: Brief Literature Reviewmentioning

confidence: 99%

Financial Health & Corporate Performance – a Comparison of Manufacturing Companies in China & India

Liang

Pathak²

2016

JAD

View full text Add to dashboard Cite

The People's Republic of China (China) and India are two leading economies in Asia Pacific. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in these two markets. A linear regression was conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a fourteen-year period are also analysed. The analysis covers the period from 2000 to 2013 (inclusive) and yielded a statistically positive correlation between ROE and the Z-Score for both markets. China and India both registered moderate-to-strong mean and median Z-Scores. However, China is comparatively healthier. These findings further support the economic stature of these two markets as Asian giants.

show abstract

Share Repurchases and Stock Valuation Models

Cited by 5 publications

References 6 publications

The Effect of Accounting Information on Stock Price Predictions Through Fluctuation of Stock Price, Evidence From Indonesia

The Effect of Accounting Information on Stock Price Predictions Through Fluctuation of Stock Price, Evidence From Indonesia

Share Repurchases, Signalling Effect and Implications for Corporate Governance: Evidence from India

Financial Health & Corporate Performance – a Comparison of Manufacturing Companies in China & India

Contact Info

Product

Resources

About