Stock Repurchase And Abnormal Returns In Den Usa And Germany
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Author | : Jan Heise |
Publisher | : GRIN Verlag |
Total Pages | : 21 |
Release | : 2008-02-26 |
Genre | : Business & Economics |
ISBN | : 3638012379 |
Seminar paper from the year 2006 in the subject Business economics - Investment and Finance, grade: A+, University of Massachusetts - Dartmouth (Charlton Business School), course: Masters Kurs: Finance for Decision Making, language: English, abstract: Two of the most prominent trends in corporate finance in the U.S. during the past 15 years are the growing popularity of share repurchases and the decreasing popularity of dividends. Repurchasing stocks is another way for managers to distribute money to shareholders, thus it plays an equivalent role as dividend payments. Consistent with Grullon and Michaely (2002) U.S. corporations distribute cash by rather repurchasing stock than by paying dividends to shareholders. Fama and French (2001) argue in the same direction. Their study provides evidence that the proportion of corporations paying cash dividends fell from 66.5% in 1978 to 20.8% in 1999. According to Grullon’s (2000) findings the total of share repurchases exceeded the total of dividend payment for industrial firms in 1998. In Germany share repurchases were highly restricted until 1998. As a consequence the volume of repurchases was small. The popularity of repurchases in the U.S. and in other countries was a strong argument for lifting the restrictions. These days, German companies announce buybacks regularly. Although capital markets in the USA and Germany are efficient the impact of stock repurchase programs differ, resulting in higher stock performance after buyback announcements in Germany than in the USA.
Author | : Andreas Hackethal |
Publisher | : |
Total Pages | : |
Release | : 2005 |
Genre | : |
ISBN | : |
Author | : David Ikenberry |
Publisher | : |
Total Pages | : 48 |
Release | : 1994 |
Genre | : Corporations |
ISBN | : |
We examine long-run firm performance following open market share repurchase announcements which occurred during the period 1980 to 1990. We find that the average abnormal four-year buy-and-hold return measured after the initial announcement is 12.1 percent. For `value' stocks, companies more likely to be repurchasing shares because of undervaluation, the average abnormal return is 45.3 percent. For repurchases announced by `glamour' stocks where undervaluation is less likely to be an important motive, no positive drift in abnormal returns is observed. Thus, at least with respect to value stocks, the market errs in its initial response and appears to ignore much of the information conveyed through repurchase announcements.
Author | : Jörg Prokop |
Publisher | : |
Total Pages | : 26 |
Release | : 2009 |
Genre | : |
ISBN | : |
This paper studies the development of the day-of-the-week effect in German and US stock market returns over the past decades. Using an OLS regression approach, we analyse four major German stock market indices for abnormal returns on each trading day of the week, with the longest observation period ranging from 2007 back to the mid-1960s. Moreover, as prior studies indicate the existence of a relationship between the magnitude of the day-of-the-week anomaly and the time of the month at which it occurs, we also analyse the indices' return behaviour categorised by week of the month. The results are compared to those of prior studies, as well as to our own findings for a sample covering the US stock market. We find that for both markets, the leading equity indices, DAX and SP500, exhibit a strong Monday effect during the older sample periods, which is fading over time, reversing during the 1990s, and vanishing after the year 2000. However, regarding smaller stock market indices, our results for the German and for the US data differ substantially, indicating that there is no general parallel market behaviour with respect to this specific return anomaly. Finally, with respect to the more recent sample periods, none of the daily return anomalies observable between the 1960s and the 1980s seem to have persisted, suggesting an increase in informational efficiency of the respective markets over time.
Author | : Christian Wulff |
Publisher | : |
Total Pages | : |
Release | : 2003 |
Genre | : |
ISBN | : |
This paper investigates the market reaction to stock splits, using a set of German firms. Similar to the findings in the U.S., I find significant positive abnormal returns around boththe announcement and the execution day of German stock splits. I also observe an increase in return variance and in liquidity after the ex-day. Apparently, legal restrictions strongly limit the ability of German companies to use a stock split for signaling. I find that abnormal returns around the announcement day are consistently much lower in Germany than in the U.S. Further, I find that abnormal returns around the announcement day are not related to changes in liquidity, but (negatively) to firm size, thus lending support to the neglected firm hypothesis. On the methodological side the effect of thin trading on event study results is examined. Using trade-to-trade returns increases the significance of abnormal returns, but the difference between alternative return measurement methods is relatively small in short event periods. Thus, the observed market reaction cannot be attributed to measurement problemscaused by thin trading.
Author | : Dilip K. Ghosh |
Publisher | : Taylor & Francis |
Total Pages | : 464 |
Release | : 2005-08-15 |
Genre | : Business & Economics |
ISBN | : 1134779496 |
Good range of (primarily US)contributors Excellent subject given increasing global financial interdependence Dilip Ghosh is well-known and respected - has also published in several journals
Author | : Jan Pieter Krahmen (editor) |
Publisher | : |
Total Pages | : 550 |
Release | : 2004 |
Genre | : Business & Economics |
ISBN | : 0199253161 |
Written by a team of scholars, predominantly from the Centre for Financial Studies in Frankfurt, this volume provides a descriptive survey of the present state of the German financial system and a new analytical framework to explain its workings.
Author | : Jonas Wirth |
Publisher | : GRIN Verlag |
Total Pages | : 112 |
Release | : 2023-06-05 |
Genre | : Business & Economics |
ISBN | : 334688483X |
Master's Thesis from the year 2022 in the subject Economics - Finance, grade: 1.0, University of Passau, language: English, abstract: In this paper, market-based and firm-specific determinants are introduced to measure their association with abnormal returns around the announcement of a share buyback conducted through tender and open market offers in India. To test the valuation effect of market-based variables: uncertainty, which is determined by implied market volatility and economic policy uncertainty. Liquidity risk, which is investigated through two illiquidity proxies and the impact of the monetary environment, represented by the three-month Mumbai Interbank Offer Rate (MIBOR) and the gold price are included. In addition, the main firm-specific hypotheses are tested to identify potential key drivers. The valuation effects examined cover the period from April 1, 2011, to March 31, 2021, during which a total of 359 share repurchases were made, 231 through tender offer and the remaining 128 through the open market. Beside separating the two buyback methods, I examine different categories in addition to the full sample to determine whether market participants' reaction to share repurchase announcements leads to abnormal returns. The rest of the paper is organized as follows. Next section provides an overview about the regulatory framework of share buyback in India. Section 3 states a brief overview about the share repurchase literature with reference to uncertainty and liquidity in global context and firm-specific literature in Indian context. Then the hypotheses are stated. Sections 5 and 6 present the methodology and data, and section 7 presents the empirical results. Section 8 provides concluding remarks.
Author | : |
Publisher | : |
Total Pages | : 83 |
Release | : 2007 |
Genre | : Corporations |
ISBN | : 9781846632563 |
Dividend policy continues to be among the premier unsolved puzzles in finance. A number of theories have been advanced to explain dividend policy. This e-book briefly reviews the principal theories of payout policy and dividend policy and summarizes the empirical evidence on these theories. Empirical evidence is equivocal and the search for new explanation for dividends continues.
Author | : Alon Brav |
Publisher | : Now Publishers Inc |
Total Pages | : 76 |
Release | : 2010 |
Genre | : Business & Economics |
ISBN | : 1601983387 |
Hedge Fund Activism begins with a brief outline of the research literature and describes datasets on hedge fund activism.