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OPEN MARKET STOCK REPURCHASE PROGRAMS AND LIQUIDITY
Author(s) -
Wiggins James B.
Publication year - 1994
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.1994.tb00187.x
Subject(s) - market liquidity , open market operation , business , monetary economics , stock (firearms) , stock market , financial system , finance , economics , monetary policy , geography , context (archaeology) , archaeology
In this paper I examine the behavior of bid and ask spreads and depths around announcements of open market stock repurchase programs. For a sample of 195 announcements from 1988 to 1990, I find statistically significant evidence of a small decline in spreads and no evidence of a shift in depths following the announcement date. Results are similar for a subsample of firms experiencing post‐announcement declines in the number of shares outstanding. I conclude that open market repurchase programs as used recently do not adversely affect market liquidity.