We investigate the completion flexibility of open market share repurchases (OMSRs) with the perspective of dominance principle in investment. Using US OMSR sample from 1990 to 2011, we find that firms with better stock performance and/or more projects, after OMSR
announcements, tend to invest more on other projects rather than repurchasing their own shares. The results are empirically supported by a different pattern of stock performance following the announcement (especially for firms with bigger announcement size and smaller firm size) and an inverse relationship between actual stock repurchase and other investments. This is consistent with the hypothesis that some firms may prefer investments on other profitable projects to the completion of OMSR programs. We also confirm that institutional ownership and capital structure are critical factors for the completion of OMSR program.
Keywords: Open market share repurchase, Corporate Investment, Dominance principle
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[2014년 제 1차] The completion flexibility of open market share rep
작성자 : 관리자
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게시일 :
2014-02-24