Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If You Use a Screen Reader

This content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.

Economic Sources of Gain in Stock Repurchases

Konan Chan, David Ikenberry and Inmoo Lee
The Journal of Financial and Quantitative Analysis
Vol. 39, No. 3 (Sep., 2004), pp. 461-479
Stable URL: http://www.jstor.org/stable/30031867
Page Count: 19
  • Read Online (Free)
  • Download ($34.00)
  • Subscribe ($19.50)
  • Cite this Item
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Economic Sources of Gain in Stock Repurchases
Preview not available

Abstract

Previous studies offer a mixed understanding of the economic role of stock repurchases. This paper investigates three key economic motivations-mispricing, disgorging free cash flow, and increasing leverage-by evaluating cross-sectional differences in both the initial market reaction and long-run performance. The initial reaction provides some support for the mispricing story. However, subsequent earnings-related information shocks suggest that the initial market reaction is incomplete and that long-run performance may be informative. The long-horizon return evidence is most consistent with the mispricing hypothesis and, to some degree, the free cash flow hypothesis. We find little support for the leverage hypothesis.

Page Thumbnails

  • Thumbnail: Page 
461
    461
  • Thumbnail: Page 
462
    462
  • Thumbnail: Page 
463
    463
  • Thumbnail: Page 
464
    464
  • Thumbnail: Page 
465
    465
  • Thumbnail: Page 
466
    466
  • Thumbnail: Page 
467
    467
  • Thumbnail: Page 
468
    468
  • Thumbnail: Page 
469
    469
  • Thumbnail: Page 
470
    470
  • Thumbnail: Page 
471
    471
  • Thumbnail: Page 
472
    472
  • Thumbnail: Page 
473
    473
  • Thumbnail: Page 
474
    474
  • Thumbnail: Page 
475
    475
  • Thumbnail: Page 
476
    476
  • Thumbnail: Page 
477
    477
  • Thumbnail: Page 
478
    478
  • Thumbnail: Page 
479
    479