Publication Type

Journal Article

Version

acceptedVersion

Publication Date

7-2015

Abstract

The long-run abnormal returns following both stock repurchases and seasoned equity offerings disappear for the events in 2003–2012. The disappearance is associated with the changing market environment: increased institutional investment, decreased trading costs, improved liquidity, and enhanced regulations on corporate governance and information disclosure. In response to the more efficient pricing of stocks, firms become less opportunistic in stock repurchases and offerings. Recent events of stock repurchases and offerings are motivated more by business-operating reasons than to exploit mispricing. Both external market factors and internal firm factors contribute to the disappearance of the postevent abnormal returns. Our findings on the recent events contrast with those of earlier studies and shed light on how the changing market environment affects both asset pricing and corporate behavior.

Keywords

long-run abnormal returns, market efficiency, stock repurchases, seasoned equity offerings, feedback effect of financial markets

Discipline

Corporate Finance | Finance and Financial Management

Research Areas

Finance

Areas of Excellence

Finance and Financial Markets

Publication

Management Science

Volume

64

Issue

2

First Page

964

Last Page

984

ISSN

0025-1909

Identifier

10.1287/mnsc.2015.2150

Publisher

INFORMS

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1287/mnsc.2015.2150

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