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Do share repurchases distort stock prices? evidence from the United States and Malaysia

Heavy share buyback years after the global finance crisis 2008–2009 drew criticism from scholars and financial press that share repurchases were being used by firms to manipulate their stock prices. This paper examines whether a greater firm’s repurchase intensity distorts stock prices reflecting to...

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Main Authors: Chee, Chong Meng, Ab Razak, Nazrul Hisyam, Amin Noordin, Bany Ariffin
Format: Article
Language:English
Published: SAGE Publications 2021
Online Access:http://psasir.upm.edu.my/id/eprint/96792/1/ABSTRACT.pdf
http://psasir.upm.edu.my/id/eprint/96792/
https://journals.sagepub.com/doi/full/10.1177/23210222211024380
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spelling my.upm.eprints.967922022-12-01T03:57:13Z http://psasir.upm.edu.my/id/eprint/96792/ Do share repurchases distort stock prices? evidence from the United States and Malaysia Chee, Chong Meng Ab Razak, Nazrul Hisyam Amin Noordin, Bany Ariffin Heavy share buyback years after the global finance crisis 2008–2009 drew criticism from scholars and financial press that share repurchases were being used by firms to manipulate their stock prices. This paper examines whether a greater firm’s repurchase intensity distorts stock prices reflecting to information. We analyse 2 sets of unbalanced panel data that contain a sample of 337 US and another sample of 167 Malaysian repurchasing firms between 2012 and 2016. Contrary to the criticism, we find that a greater firms’ share buyback intensity in the USA stimulates faster incorporation of information in price and results in more efficient stock prices. The main findings hold true and are robust when an alternative measure of share repurchase intensity was used. The findings of US sample support the notion that share repurchase serves as a signalling tool and price support to promote more efficient stock prices. We also find no strong evidence supporting the notion that shares repurchased by Malaysian firms distort stock prices. SAGE Publications 2021 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/96792/1/ABSTRACT.pdf Chee, Chong Meng and Ab Razak, Nazrul Hisyam and Amin Noordin, Bany Ariffin (2021) Do share repurchases distort stock prices? evidence from the United States and Malaysia. Studies in Microeconomics, 10 (2). pp. 1-24. ISSN 2321-0222; ESSN: 2321-8398 https://journals.sagepub.com/doi/full/10.1177/23210222211024380 10.1177/232102222110243
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description Heavy share buyback years after the global finance crisis 2008–2009 drew criticism from scholars and financial press that share repurchases were being used by firms to manipulate their stock prices. This paper examines whether a greater firm’s repurchase intensity distorts stock prices reflecting to information. We analyse 2 sets of unbalanced panel data that contain a sample of 337 US and another sample of 167 Malaysian repurchasing firms between 2012 and 2016. Contrary to the criticism, we find that a greater firms’ share buyback intensity in the USA stimulates faster incorporation of information in price and results in more efficient stock prices. The main findings hold true and are robust when an alternative measure of share repurchase intensity was used. The findings of US sample support the notion that share repurchase serves as a signalling tool and price support to promote more efficient stock prices. We also find no strong evidence supporting the notion that shares repurchased by Malaysian firms distort stock prices.
format Article
author Chee, Chong Meng
Ab Razak, Nazrul Hisyam
Amin Noordin, Bany Ariffin
spellingShingle Chee, Chong Meng
Ab Razak, Nazrul Hisyam
Amin Noordin, Bany Ariffin
Do share repurchases distort stock prices? evidence from the United States and Malaysia
author_facet Chee, Chong Meng
Ab Razak, Nazrul Hisyam
Amin Noordin, Bany Ariffin
author_sort Chee, Chong Meng
title Do share repurchases distort stock prices? evidence from the United States and Malaysia
title_short Do share repurchases distort stock prices? evidence from the United States and Malaysia
title_full Do share repurchases distort stock prices? evidence from the United States and Malaysia
title_fullStr Do share repurchases distort stock prices? evidence from the United States and Malaysia
title_full_unstemmed Do share repurchases distort stock prices? evidence from the United States and Malaysia
title_sort do share repurchases distort stock prices? evidence from the united states and malaysia
publisher SAGE Publications
publishDate 2021
url http://psasir.upm.edu.my/id/eprint/96792/1/ABSTRACT.pdf
http://psasir.upm.edu.my/id/eprint/96792/
https://journals.sagepub.com/doi/full/10.1177/23210222211024380
_version_ 1751538256388816896
score 13.211869

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