TY - JOUR
T1 - Testing share repurchases hypotheses
T2 - A conditional study
AU - Bonini, Stefano
AU - Capizzi, Vincenzo
AU - Lombardi, Maurizio
AU - Mazzei, Roberto
PY - 2008
Y1 - 2008
N2 - 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.
AB - 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.
KW - Market efficiency
KW - Payout policy
KW - Price patterns
KW - Share repurchases
UR - http://www.scopus.com/inward/record.url?scp=84896262967&partnerID=8YFLogxK
U2 - 10.22495/cocv5i4c4p1
DO - 10.22495/cocv5i4c4p1
M3 - Article
SN - 1727-9232
VL - 5
SP - 420
EP - 431
JO - Corporate Ownership and Control
JF - Corporate Ownership and Control
IS - 4 E CONT. 4
ER -