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Price Performance Following Share‐Repurchase Announcements by Closed‐End Funds
Author(s) -
Akhigbe Aigbe,
Kim Doseong,
Madura Jeff
Publication year - 2007
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.1540-6288.2007.00182.x
Subject(s) - closed end fund , business , monetary economics , equity (law) , fund of funds , stock price , share repurchase , global assets under management , diversification (marketing strategy) , stock (firearms) , passive management , finance , financial system , institutional investor , economics , shareholder , market liquidity , corporate governance , marketing , mechanical engineering , paleontology , political science , law , biology , engineering , series (stratigraphy)
We investigate the price performance of closed‐end funds that announce share‐repurchase programs. Closed‐end funds experience positive average stock‐price reactions to the announcements. The long‐run buy‐and‐hold abnormal returns of repurchasing funds over the subsequent three years are significantly higher than a nonrepurchasing control sample matched by size, type, investment style and geographic diversification. Funds with larger discounts, international funds, equity funds, and funds that announce larger repurchases or frequently announce repurchases, experience more positive stock‐price reactions. Except for larger repurchases, the same characteristics are associated with more positive long‐run buy‐and‐hold returns.