Equity ownership and firm value: Evidence from targeted stock repurchases

Saeyoung Chang, Michael Hertzel

Research output: Contribution to journalArticle

7 Scopus citations

Abstract

In contrast to the negative average abnormal return associated with the announcement of a control-related targeted repurchase (greenmail transaction), we find that the announcement of a noncontrol-related targeted repurchase is associated with a positive and significant average abnormal return. Cross-sectional analysis indicates that the change in firm value at the announcement of a noncontrol-related targeted repurchase is negatively related to the resulting changes in both insider ownership and outside blockholdings. We also find significant differences in announcement-period stock price effects depending on the identity of the selling shareholder.

Original languageEnglish (US)
Pages (from-to)389-407
Number of pages19
JournalFinancial Review
Volume39
Issue number3
DOIs
StatePublished - Aug 2004

Keywords

  • Event study
  • G32/G34/G35
  • Insider holdings
  • Managerial entrenchment
  • Targeted stock repurchases

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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