Testing share repurchases hypotheses: A conditional study

Stefano Bonini, Vincenzo Capizzi, Maurizio Lombardi, Roberto Mazzei

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

In the past 20 years share buybacks have experienced a tremendous growth. Yet, we still don't have a clear understanding of this phenomenon, also because of limited samples available on these corporate decisions. This paper aims at testing the main hypotheses on buybacks drivers and effects by analysing the impact of share repurchase announcements on the performance of companies listed on the Italian Stock Exchange, conditional and unconditional on the 1998 introduction of the Capital Market Reform. Our findings show that, by imposing more stringent rules on transparency and equal treatment of shareholders in buybacks operations, the change in regulation has increased the volume and frequency of share repurchases announcements. Analogously, the number of repurchasing companies has soared as well. Finally, market reaction to buybacks, as measured by abnormal returns and cumulative abnormal returns has consistently reversed switching from negative to positive long term CARs.

Original languageEnglish
Pages (from-to)420-431
Number of pages12
JournalCorporate Ownership and Control
Volume5
Issue number4 E CONT. 4
DOIs
StatePublished - 2008

Keywords

  • Market efficiency
  • Payout policy
  • Price patterns
  • Share repurchases

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