Stock returns and open-market stock repurchase announcements

Chao Shin Liu, David A. Ziebart

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


Recent studies document stock price underreactions and overreactions. This evidence is extended by studying open-market stock repurchase announcements. Repurchase announcements were chosen for the study because of the uncertainty regarding the appropriate interpretation of the repurchase announcement. Cross-section regression models are used to test the relation between the reaction to the repurchase announcement and returns in subsequent periods. The results indicate that the market overreacts to repurchase announcements that are deemed to be “good news” by the market. Neither reversal nor drift is observed following repurchase announcements considered to be “bad news” by the market. The results are robust and are not driven by a few influential observations, beta shifts, or bid-ask bounce.

Original languageEnglish
Pages (from-to)709-728
Number of pages20
JournalFinancial Review
Issue number4
StatePublished - Nov 1997

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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