Determinants of share returns following repurchase announcements in China
Abstract
By combining the market model with the three-factor model, this study investigates firms’ share returns after the announcement of share repurchase. Employing data for China’s A-share market, this study’s sample utilizes 417 share repurchase announcements over the period of 2000 to 2012. Empirical results show that firms with higher sales growth rates are more likely to send a positive signal to the market through their
share repurchase efforts. Analysis also shows that the higher a firm’s price-to-earnings ratio (utilized as a measure of overvaluation), the lower the firm’s cumulative abnormal returns. These results imply that Chinese share markets put more emphasis on the firm’s future growth and share overvaluation.... [Show full abstract]
Keywords
leverage hypothesis; market response; operating performance; repurchase announcements; share repurchase; signaling hypothesisFields of Research
150205 Investment and Risk Management; 140210 International Economics and International FinanceDate
2017-06-06Type
Journal ArticleCollections
© Christopher Gan, Chao Bian, Damon Wu, David A. Cohen, 2017
This is a published version of the paper, available at LLC "CPC "Business Perspectives" at http://dx.doi.org/10.21511/imfi.14(2).2017.01