Do firms buy their stock at bargain prices? Evidence from actual stock repurchase disclosure

Arbeitspapier

We use new data from SEC filings to investigate how S&P 500 firms execute their open market repurchase programs. We find that smaller S&P 500 firms repurchase less frequently than larger firms, and at a price which is significantly lower than the average market price. Their repurchase activity is followed by a positive and significant abnormal return which lasts up to three months after the repurchase. These findings do not hold for large S&P 500 firms. Our interpretation is that small firms repurchase strategically, whereas the repurchase activity of large firms is more focused on the disbursement of free cash.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFS Working Paper ; No. 2011/17

Classification and Topics

• Classification: Wirtschaft ; Information and Market Efficiency; Event Studies; Insider Trading ; Corporate Finance and Governance: General ; Payout Policy
• Subject: Stock Repurchases ; Stock Buybacks ; Payout Policy ; Timing ; Bid-Ask Spread ; Liquidity ; Aktienrückkauf ; Betriebsgröße ; Börsenkurs ; Bid-Ask Spread ; Betriebliche Liquidität ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ben-Rephael, Azi ; Oded, Jacob ; Wohl, Avi
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (where): Frankfurt a. M.
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/57340
• URN: urn:nbn:de:hebis:30-115334
• Last update: 10.03.2025, 11:45 AM CET