آیا رکورد قبلی در اثر ثروت اعلامیه های خرید مجدد اشتراکی بازار آزاد اهمیت دارد؟

This study investigates whether prior experience of share repurchases matters in the market reactions to the subsequent repurchase announcements. Specifically, we study the prior record on actual buybacks and post-announcement stock performance. We find that upon the announcement of share repurchases, stock markets not only respond more positively to those made by firms that have better record on actual buyback following their previous repurchase plan announcements, but also experience a stronger reaction for announcing firms with better stock performance after prior repurchase announcements. These results hold even after controlling for other variables that are found important in influencing the market reactions to repurchase announcements.

Open-market share repurchases have become common for firms to conduct on a repeated and regular basis. For example, in 1996, more than 54% of firms had previously bought back their shares, and around 27% of the firms made multiple open-market repurchase programs in the prior five years (Jagannathan & Stephens, 2003). Previous studies indicate that firms announcing share repurchases in the open-market convey that they are undervalued (Comment and Jarrell, 1991, Ikenberry et al., 2000, Ofer and Thakor, 1987 and Stephens and Weisbach, 1998). Consequently, after share repurchase announcements, announcing firms experience an average buy-and-hold yearly return of 26.2% following the announcement date (Chan, Ikenberry, & Lee, 2004).

Most prior studies focus on the “good” motives of share repurchases that intend to enhance shareholder wealth, but it should also be noted that firms announcing buybacks are not obliged to complete such plans. Given the evidence that repurchase announcements are associated with positive share price changes, and that firms actually buy back only a small proportion of shares, we wonder if investors take the prior record of fulfilling share repurchase announcements into account in responding to subsequent announcements. We examine the influence of this prior record by investigating the experience of actual buybacks and stock performance following prior announcements of repurchases. We find that upon the announcement of share repurchases, stock markets respond more positively to those made by firms that have made better record on actual repurchases following previous such announcements. Furthermore, the evidence also suggests that firms that deliver better stock performance after prior repurchase announcements experience a stronger positive market reaction.