Market Reactions To Share Repurchase Announcements In Malaysia
This paper examines share price behaviour surrounding share repurchase announcements in the context of information asymmetry and signalling hypothesis. We use event-type analysis to examine abnormal returns around three related repurchase announcements: announcement of the board’s decision, annou...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Asian Academy of Management (AAM)
2014
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| Subjects: | |
| Online Access: | http://eprints.usm.my/39942/1/AAMJAF_10-1-3-G1_%2845-73%29.pdf |
| _version_ | 1825834147004809216 |
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| author | Isa, Mansor Siew , Peng Lee |
| author_facet | Isa, Mansor Siew , Peng Lee |
| author_sort | Isa, Mansor |
| collection | USM |
| description | This paper examines share price behaviour surrounding share repurchase
announcements in the context of information asymmetry and signalling hypothesis. We
use event-type analysis to examine abnormal returns around three related repurchase
announcements: announcement of the board’s decision, announcement of shareholder
approval and announcement of actual share purchase. The results show that stock prices
increase significantly in response to each of the three repurchase announcements, but
there is no significant difference in the market reaction to firms that eventually make a
repurchase versus firms that do not. We conclude that our results are consistent with the
underpricing signalling hypothesis. Our results also show that small firms earn greater
abnormal returns than large firms during each of the announcements, lending support to
the information asymmetry hypothesis. Our multivariate regressions indicate that firm
characteristics such as firm size, return on assets and the market-to-book ratio are found
to be significantly related to the announcement-related abnormal returns. Finally, logit
and probit results indicate that firms’ repurchase decision depends on firm size,
profitability and price changes during announcements. |
| first_indexed | 2024-03-06T15:18:23Z |
| format | Article |
| id | usm.eprints-39942 |
| institution | Universiti Sains Malaysia |
| language | English |
| last_indexed | 2024-03-06T15:18:23Z |
| publishDate | 2014 |
| publisher | Asian Academy of Management (AAM) |
| record_format | dspace |
| spelling | usm.eprints-399422018-04-05T04:41:47Z http://eprints.usm.my/39942/ Market Reactions To Share Repurchase Announcements In Malaysia Isa, Mansor Siew , Peng Lee HD28-70 Management. Industrial Management This paper examines share price behaviour surrounding share repurchase announcements in the context of information asymmetry and signalling hypothesis. We use event-type analysis to examine abnormal returns around three related repurchase announcements: announcement of the board’s decision, announcement of shareholder approval and announcement of actual share purchase. The results show that stock prices increase significantly in response to each of the three repurchase announcements, but there is no significant difference in the market reaction to firms that eventually make a repurchase versus firms that do not. We conclude that our results are consistent with the underpricing signalling hypothesis. Our results also show that small firms earn greater abnormal returns than large firms during each of the announcements, lending support to the information asymmetry hypothesis. Our multivariate regressions indicate that firm characteristics such as firm size, return on assets and the market-to-book ratio are found to be significantly related to the announcement-related abnormal returns. Finally, logit and probit results indicate that firms’ repurchase decision depends on firm size, profitability and price changes during announcements. Asian Academy of Management (AAM) 2014 Article PeerReviewed application/pdf en http://eprints.usm.my/39942/1/AAMJAF_10-1-3-G1_%2845-73%29.pdf Isa, Mansor and Siew , Peng Lee (2014) Market Reactions To Share Repurchase Announcements In Malaysia. Asian Academy of Management Journal of Accounting and Finance, 10 (1). pp. 1-29. ISSN 1823-4992 http://web.usm.my/journal/aamjaf/10-1-3-2014.html |
| spellingShingle | HD28-70 Management. Industrial Management Isa, Mansor Siew , Peng Lee Market Reactions To Share Repurchase Announcements In Malaysia |
| title | Market Reactions To Share Repurchase
Announcements In Malaysia |
| title_full | Market Reactions To Share Repurchase
Announcements In Malaysia |
| title_fullStr | Market Reactions To Share Repurchase
Announcements In Malaysia |
| title_full_unstemmed | Market Reactions To Share Repurchase
Announcements In Malaysia |
| title_short | Market Reactions To Share Repurchase
Announcements In Malaysia |
| title_sort | market reactions to share repurchase announcements in malaysia |
| topic | HD28-70 Management. Industrial Management |
| url | http://eprints.usm.my/39942/1/AAMJAF_10-1-3-G1_%2845-73%29.pdf |
| work_keys_str_mv | AT isamansor marketreactionstosharerepurchaseannouncementsinmalaysia AT siewpenglee marketreactionstosharerepurchaseannouncementsinmalaysia |