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Market Reactions To Share Repurchase Announcements In Malaysia

This paper examines share price behaviour surrounding share repurchase announcements in the context of information asymmetry and signalling hypothesis. We use event-type analysis to examine abnormal returns around three related repurchase announcements: announcement of the board’s decision, annou...

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Main Authors: Isa, Mansor, Siew , Peng Lee
Format: Article
Language:English
Published: Asian Academy of Management (AAM) 2014
Subjects:
HD28-70 Management. Industrial Management
Online Access:http://eprints.usm.my/39942/1/AAMJAF_10-1-3-G1_%2845-73%29.pdf
http://eprints.usm.my/39942/
http://web.usm.my/journal/aamjaf/10-1-3-2014.html
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spelling my.usm.eprints.39942 http://eprints.usm.my/39942/ Market Reactions To Share Repurchase Announcements In Malaysia Isa, Mansor Siew , Peng Lee HD28-70 Management. Industrial Management This paper examines share price behaviour surrounding share repurchase announcements in the context of information asymmetry and signalling hypothesis. We use event-type analysis to examine abnormal returns around three related repurchase announcements: announcement of the board’s decision, announcement of shareholder approval and announcement of actual share purchase. The results show that stock prices increase significantly in response to each of the three repurchase announcements, but there is no significant difference in the market reaction to firms that eventually make a repurchase versus firms that do not. We conclude that our results are consistent with the underpricing signalling hypothesis. Our results also show that small firms earn greater abnormal returns than large firms during each of the announcements, lending support to the information asymmetry hypothesis. Our multivariate regressions indicate that firm characteristics such as firm size, return on assets and the market-to-book ratio are found to be significantly related to the announcement-related abnormal returns. Finally, logit and probit results indicate that firms’ repurchase decision depends on firm size, profitability and price changes during announcements. Asian Academy of Management (AAM) 2014 Article PeerReviewed application/pdf en http://eprints.usm.my/39942/1/AAMJAF_10-1-3-G1_%2845-73%29.pdf Isa, Mansor and Siew , Peng Lee (2014) Market Reactions To Share Repurchase Announcements In Malaysia. Asian Academy of Management Journal of Accounting and Finance, 10 (1). pp. 1-29. ISSN 1823-4992 http://web.usm.my/journal/aamjaf/10-1-3-2014.html
institution Universiti Sains Malaysia
building Hamzah Sendut Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Sains Malaysia
content_source USM Institutional Repository
url_provider http://eprints.usm.my/
language English
topic HD28-70 Management. Industrial Management
spellingShingle HD28-70 Management. Industrial Management
Isa, Mansor
Siew , Peng Lee
Market Reactions To Share Repurchase Announcements In Malaysia
description This paper examines share price behaviour surrounding share repurchase announcements in the context of information asymmetry and signalling hypothesis. We use event-type analysis to examine abnormal returns around three related repurchase announcements: announcement of the board’s decision, announcement of shareholder approval and announcement of actual share purchase. The results show that stock prices increase significantly in response to each of the three repurchase announcements, but there is no significant difference in the market reaction to firms that eventually make a repurchase versus firms that do not. We conclude that our results are consistent with the underpricing signalling hypothesis. Our results also show that small firms earn greater abnormal returns than large firms during each of the announcements, lending support to the information asymmetry hypothesis. Our multivariate regressions indicate that firm characteristics such as firm size, return on assets and the market-to-book ratio are found to be significantly related to the announcement-related abnormal returns. Finally, logit and probit results indicate that firms’ repurchase decision depends on firm size, profitability and price changes during announcements.
format Article
author Isa, Mansor
Siew , Peng Lee
author_facet Isa, Mansor
Siew , Peng Lee
author_sort Isa, Mansor
title Market Reactions To Share Repurchase Announcements In Malaysia
title_short Market Reactions To Share Repurchase Announcements In Malaysia
title_full Market Reactions To Share Repurchase Announcements In Malaysia
title_fullStr Market Reactions To Share Repurchase Announcements In Malaysia
title_full_unstemmed Market Reactions To Share Repurchase Announcements In Malaysia
title_sort market reactions to share repurchase announcements in malaysia
publisher Asian Academy of Management (AAM)
publishDate 2014
url http://eprints.usm.my/39942/1/AAMJAF_10-1-3-G1_%2845-73%29.pdf
http://eprints.usm.my/39942/
http://web.usm.my/journal/aamjaf/10-1-3-2014.html
_version_ 1643709799722909696
score 13.211869

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