Targeted Repurchases and Common Stock Returns
Year: 1991
Type: article
Abstract: We examine whether the actions of the blockholder and repurchasing managers in targeted repurchases of common stock benefit the repurchasing firm's stockholders. Positive stock returns from the time of the initial investment through the repurchase indicate that blockholders' actions benefit stockholders. We argue that the negative stock price reaction to a repurchase does not resolve whether the decision to repurchase helps or harms stockholders. That determination depends on the alternatives forgone by the repurchasing managers. A low incidence of reported takeover events before and after block repurchases suggests that repurchases typically are not undertaken in place of a takeover of the firm.
Source: The RAND Journal of Economics
DOI: 10.2307/2600988
Authors: Wayne H. Mikkelson, Richard S. Ruback
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2034041331