The market valuation of share repurchases in Europe

Dimitris Andriosopoulos, Meziane Lasfer

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

We analyze a uniquely constructed data set of open market share repurchases across a sample of European firms. We find that the announcement date market reaction is lower than that in the US, mainly because of (i) the relatively large number of recurring announcements which generate significantly lower returns than the initial announcements of intention to repurchase shares; (ii) the rather low market reaction in France, due probably to specific governance and corporate cultural issues; and (iii) the regulatory reform that allowed UK firms to keep the repurchased shares as treasury stock, which decreased their market impact. Across our countries, taxation, shareholder protection, and the European Union's Market Abuse Directive do not affect significantly the market valuation of repurchases. Ultimately, domestic institutional specificities and reforms play significant roles in the market valuation and popularity of share repurchases.
LanguageEnglish
Pages327–339
Number of pages13
JournalJournal of Banking and Finance
Volume55
Early online date2 May 2014
DOIs
Publication statusPublished - 30 Jun 2015

Fingerprint

Share repurchases
Market valuation
Announcement
Market reaction
Governance
Specificity
Market impact
Market abuse
Regulatory reform
Cultural issues
Taxation
European Union
Market share
European firms
Shareholder protection
France
Repurchase

Keywords

  • share repurchases
  • recurring announcements
  • investor protection
  • taxation
  • signaling undervaluation
  • market abuse directive (MAD)
  • regulatory treatment of share repurchases

Cite this

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The market valuation of share repurchases in Europe. / Andriosopoulos, Dimitris; Lasfer, Meziane.

In: Journal of Banking and Finance, Vol. 55, 30.06.2015, p. 327–339.

Research output: Contribution to journalArticle

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