Market underreaction to open market share repurchases Journal Article uri icon



  • We examine long-run firm performance following open market share repurchase announcements, 1980-1990. We find that the average abnormal four-year buy-and-hold return measured after the initial announcement is 12.1%. For СvalueТ stocks, companies more likely to be repurchasing shares because of undervaluation, the average abnormal return is 45.3%. For repurchases announced by СglamourТ stocks, where undervaluation is less likely to be an important motive, no positive drift in abnormal returns is observed. Thus, at least with respect to value stocks, the market errs in its initial response and appears to ignore much of the information conveyed through repurchase announcements

publication date

  • December 3, 2007

Date in CU Experts

  • October 3, 2013 2:33 AM

Full Author List

  • Ikenberry DL; Josef L; Theo V

author count

  • 3