Mingshan Zhang¹, Zhimin Wang¹, Qian Mao²

(1. New Jersey City University, USA; 2. Kean University, USA)

 

 

Abstract: The purpose of this paper is trying to test whether open-market stock repurchase announcements are still a signaling event. Using tender-offers as a benchmark, the study looks at open-market repurchases from several perspectives. Evidence includes short-term and long-term market reactions, accounting fundamentals, insider trading behavior, and analysts’ forecast revisions. The consensus of the evidence is that: although tender-offer repurchase announcements are still a signaling device, open-market repurchases have little if any signaling content. Open-market repurchase announcements appear to provide an incentive for managers to conduct earnings management.

 

 

Key words: stock repurchase; signaling; earnings management

 

JEL code: G1