The Effect of Enhanced Disclosure on Open Market Stock Repurchases

Simkovic, Michael

doi:10.2139/ssrn.986143

Cited by 22 publications

(21 citation statements)

References 3 publications

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“…7 Simkovic (2009) reports that OMR completion rates have increased recently perhaps in response to enhanced required disclosures regarding repurchase activity. 8 However, given the need to access quarterly filings for this information, OMR repurchases can still only be verified with significant time lags.…”

Section: Introductionmentioning

confidence: 99%

Accelerated share repurchases

Bargeron

Kulchania

Thomas

2011

Journal of Financial Economics

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Accelerated share repurchases (ASRs) are credible commitments by firms to repurchase shares immediately. Including an ASR in a repurchase program reduces the flexibility that firms have to alter an announced program in response to subsequent changes in the price and liquidity of its shares, unexpected shocks to cash flow and/or investment, etc. Thus, we investigate whether firms' decisions to include ASRs in their repurchase programs are associated with factors expected to influence the costs of lost flexibility and the benefits of enhanced credibility and immediacy. We find robust evidence consistent with the costs of lost flexibility and the benefits of credibility and immediacy being important determinants of ASR adoption. Additionally, we find that ASR announcements are associated with positive average abnormal stock returns.

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Section: Introductionmentioning

confidence: 99%

Accelerated share repurchases

Bargeron

Kulchania

Thomas

2011

Journal of Financial Economics

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“…Firms were exempted from incompletion provisions by indicating that actual repurchases would depend on market conditions (Stephens and Weisbach, ; Ikenberry et al ., ; Fried, ). Firms that announce repurchase targets may not intend to complete them in order to confuse the market or benefit from insider trading (Simkovic, ). Such manipulation is not covered under anti‐price manipulations laws.…”

Section: Open Market Share Repurchase Regulationsmentioning

confidence: 99%

“…On the other hand, repurchase completion rates increase after the imposition of the SEC disclosure requirement (Simkovic, ; Bonaimé, ). When firms actively repurchase shares outstanding, especially for those which underperform analysts' forecasts prior to a repurchase announcement, we document significant results associated with better post‐announcement operating performances during the high disclosure period.…”

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confidence: 99%

Earnings Surprises in Analysts' Forecasts, Mandatory Disclosure, and Share Repurchases

Liu

Chen

2015

Abacus

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This paper examines the impact of forecast errors and the mandatory disclosure of repurchase transactions required by 2003 Securities and Exchange Commission (SEC) regulations on share repurchases. We define forecast errors as the difference between analysts' forecasted earnings and actual earnings. We argue that firms with positive forecast errors imply greater information asymmetry, which may induce them to signal through share repurchases. We show that both the repurchase target and analysts' forecast revision are positively related to forecast errors. Furthermore, these associations are more pronounced in the low disclosure period (1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003) where greater information asymmetry between managers and outside investors is found, while increased transparency in the high disclosure period (2004)(2005)(2006) leads to more significant improvement in longterm performances for firms with positive forecast errors. The results are consistent with our expectations that the information asymmetry implied in forecast errors, along with a shock change from the introduction of the 2003 SEC regulation, affect both corporate and analysts' behaviour.

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“…These findings may indicate that companies tend to start repurchase programs when their stock is undervalued in the market; investors see repurchase announcements as signals of undervaluation, and push stock prices up through their trading on the announcement day and in the following months. This evidence is rather indirect given that actual purchases of own stock do not necessarily follow repurchase announcements (Simkovic, 2009;Stephens and Weisbach, 1998).…”

Section: Motivation and Research Questionsmentioning

confidence: 99%

The effects of ownership and stock liquidity on the timing of repurchase transactions

Cesari

Espenlaub

Khurshed

et al. 2012

Journal of Corporate Finance

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We analyze detailed monthly data on U.S. open market stock repurchases (OMRs) that recently became available following stricter disclosure requirements. We find evidence that OMRs are timed to benefit non-selling shareholders. We present evidence that the profits to companies from timing repurchases are significantly related to ownership structure. Institutional ownership reduces companies' opportunities to repurchase stock at bargain prices. At low levels, insider ownership increases timing profits and at high levels it reduces them. Stock liquidity increases profits from timing OMRs.

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The Effect of Enhanced Disclosure on Open Market Stock Repurchases

Cited by 22 publications

References 3 publications

Accelerated share repurchases

Accelerated share repurchases

Earnings Surprises in Analysts' Forecasts, Mandatory Disclosure, and Share Repurchases

The effects of ownership and stock liquidity on the timing of repurchase transactions

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