Market Reaction to Actual Share Repurchase in Malaysia
Year: 2011
Type: article
Abstract: This paper examines share price reaction surrounding actual sharerepurchases made by Malaysian listed firms from 2001 until 2005.Using event study methodology and the market model, the evidenceindicates that a significant increase in share prices occurs in a threedayperiod beginning from the repurchase day. We also findevidence that there is a general price decline in the preâ€purchaseperiod that suggests that firms made their repurchase after a periodof consecutive price declines. This evidence clearly indicates theexistence of a signalling effect and is consistent with theundervaluation hypothesis. It also indicates that the share repurchaseprogramme can be used as an effective tool for price stabilisation.Keywords: Open Market Repurchase, Signalling Hypothesis, ShareRepurchase
Authors: Mansor Isa, Zaidi Ghani, Siewâ€Peng Lee
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W2183526529