Premium
The Stock Market Reaction to Significant Tender Offer Repurchases of Stock: Size and Purpose Perspective
Author(s) -
Davidson Wallace N.,
Garrison Sharon H.
Publication year - 1989
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1989.tb00332.x
Subject(s) - stock (firearms) , business , stock market , event study , stock market bubble , common stock , monetary economics , financial economics , finance , economics , mechanical engineering , paleontology , context (archaeology) , horse , engineering , biology
This paper uses event methodology to examine the impact of common stock repurchases on the repurchasing firm's common stock returns, including examination of various subsamples to test the effects of size and purpose of repurchase. Although the market reacts positively to general repurchase announcements, it reacts negatively to those repurchases used to fend off takeover attempts and does not react at all to stock repurchases for employee stock option plan (ESOP) purposes.