The announcement effects of off-market share repurchases in Australia
Source TitleAustralian Journal of Management
PublisherUNIV NEW SOUTH WALES, AUSTR GRAD SCH MANAGEMENT
University of Melbourne Author/sBROWN, CHRISTINE
Document TypeJournal Article
CitationsBrown, C. (2007). The announcement effects of off-market share repurchases in Australia. AUSTRALIAN JOURNAL OF MANAGEMENT, 32 (2), pp.369-385. https://doi.org/10.1177/031289620703200210.
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C1 - Refereed Journal Article
This paper investigates the price and volume behaviour around the announcement of a type of off-market repurchase (equal access repurchases) in Australia. In contrast to US studies which document abnormal returns of around 8% for off-market repurchases, we find much smaller but significant abnormal returns of around 1.2% on the announcement date for equal access repurchases. The evidence suggests that the abnormal returns are related to the discount-to-market price at which the offer is made (which reflects special taxation arrangements). We also document a dramatic increase in trading volume on the announcement and subsequent day and argue that this trading may be motivated by the level of tax benefits passed on to participating shareholders.
KeywordsBanking; Finance and Investment
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