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.

Testing share repurchases hypotheses: a conditional study / S. Bonini, V. Capizzi, M.L. Lombardi, R. Mazzei. - In: CORPORATE OWNERSHIP & CONTROL. - ISSN 1727-9232. - 5:4(2008), pp. 420-431. [10.22495/cocv5i4c4p1]

Testing share repurchases hypotheses: a conditional study

S. Bonini
Primo
;
2008

Abstract

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.
share repurchases; market efficiency; price patterns; payout policy
Settore SECS-P/11 - Economia degli Intermediari Finanziari
2008
Article (author)
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2434/783950
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