share buyback europe_0.pdf - Are Buybacks Good for Long-Term Shareholder Value Evidence from Buybacks around the World Finance Working Paper N°

share buyback europe_0.pdf - Are Buybacks Good for...

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Finance Working Paper N° 436/2014 March 2018 Alberto Manconi Bocconi University Urs Peyer INSEAD and ECGI Theo Vermaelen INSEAD and ECGI © Alberto Manconi, Urs Peyer and Theo Vermaelen 2018. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, includ- ing © notice, is given to the source. This paper can be downloaded without charge from: Are Buybacks Good for Long-Term Shareholder Value? Evidence from Buybacks around the World
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ECGI Working Paper Series in Finance Working Paper N° 436/2014 March 2018 Alberto Manconi Urs Peyer Theo Vermaelen Are Buybacks Good for Long-Term Shareholder Value? Evidence from Buybacks around the World We thank Raquel F. Oliveira of the Central Bank of Brazil for help clarifying the Brazilian regulation, and Cornelia Schuette for research assistance. We also thank seminar participants in Tilburg, Wupperthal, Exeter, Warwick, the 2013 AFA, European FMA, EFMA, and Dimitris Andriosopoulos, Panayotis Andreou, Ken Bechman, Bill Megginson, Roni Michaely, and Laura Starks, for valuable discussions and comments. © Alberto Manconi, Urs Peyer and Theo Vermaelen 2018. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.
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Abstract Using a sample of over 9,000 buyback announcements from 31 non-U.S. coun- tries, we find support for the results of studies based on U.S. data: on average, share repurchases are associated with significant positive short-term and long- term excess returns. However, excess returns depend on the likelihood of under - valuation, the efficiency and liquidity of equity markets, and the popularity of stock option compensation. In contrast to findings in U.S. markets, we do not find that these long-term excess returns are simply a compensation for takeover risk or have become less significant in recent years. Keywords: buyback, share repurchase, governance, market timing, agency problems, global regulation JEL Classifications: G3 Alberto Manconi Assistant Professor Bocconi University, Department of Finance Via Roentgen 1 20136 Milan, Italy phone: +39 258 362 725 e-mail: [email protected] Urs Peyer* Associate Professor of Finance INSEAD, Finance Department Bd de Constance 77305 Fontainebleau Cedex, France phone: +33 160 724 178 e-mail: [email protected] Theo Vermaelen Professor of Finance INSEAD, Finance Department Bd de Constance 77305 Fontainebleau Cedex, France phone: +33 160 724 432 e-mail: [email protected] *Corresponding Author
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Electronic copy available at: *: Alberto Manconi: Finance Department, Tilburg University and CentER, PO Box 90153, 5000LE Tilburg, Netherlands, email: [email protected] . Urs Peyer: Finance Department, INSEAD, Bd de Constance, 77305 Fontainebleau Cedex, France, email: [email protected] . Theo Vermaelen: Finance Department, INSEAD, Bd de Constance, 77305 Fontainebleau Cedex, France, email: [email protected] . We thank Raquel F. Oliveira of the Central Bank of Brazil for help clarifying the Brazilian regulation,
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