http://www.loc.gov/mods/v3 http://www.loc.gov/standards/mods/v3/mods-3-2.xsd
Announcements of stock repurchases during 1988 and 1989
an empirical analysis examining the disclosure of intended open market repurchases
A multi-method approach is used to examine firms that announced stock repurchases on the open market during 1988 and 1989. An event study methodology is used to determine the abnormal returns of these firms relative to other firms with the same market risk. Returns are also examined 30 days, 60 days, and 90 days after the announcement date. The sample is subdivided into additional groups representing management's stated reason for the repurchase, stock market exchange on which the stock is traded, general industry classification, firm size, source of the repurchase information, and the actions of the firm after previous repurchase announcements in the 1980s. The abnormal returns generated by these repurchase announcements are used in a multivariate regression with selected financial statement characteristics of repurchasing firms to determine if there is any association between abnormal returns and these variables. An overall positive abnormal return of 2.02 percent was found for the sample firms, although the results were not statistically significant. Over-the-counter (OTC) firms outperformed firms trading on the New York and American exchanges for all risk groups. No significant differences were found between true and false signalling firms. Firms whose managers announced the repurchase because of "undervalued" stock had higher returns (by a factor of two or more) than other firms. Firms that gave any reason at all for the repurchase had higher returns than firms that made announcements without giving a reason for the repurchase. Although the results were not statistically significant, they suggest that size, as proxied by total assets (TA) was a factor in the magnitude of the abnormal returns. Large firms (TA > 10 billion) had slightly negative abnormal returns. All other groups had positive abnormal returns that increased as the size group decreased. When comparing firms by industry, financial services firms and banks (SIC codes of 6xxx) had the smallest returns by a factor of two or more. Firms whose announcements appeared in the Wall Street Journal had lower returns than firms whose announcements did not appear in the Wall Street Journal. In the regression, only the Earnings/Price ratio was a significant indicator of abnormal returns generated by these announcements.