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The Market Valuation of Share Repurchases in Europe

Andriosopoulos, D. & Lasfer, M. (2014). The Market Valuation of Share Repurchases in Europe. Journal of Banking and Finance, 55, pp. 327-339. doi: 10.1016/j.jbankfin.2014.04.017


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. Our results imply that, ultimately, domestic institutional specificities and reforms play significant roles in the market valuation and popularity of share repurchases.

Publication Type: Article
Additional Information: © 2015, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International
Publisher Keywords: Share repurchases; Recurring announcements; Investor protection; Taxation; Signaling undervaluation; Market Abuse Directive (MAD); Regulatory treatment of share repurchases
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
Text - Accepted Version
Available under License : See the attached licence file.

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