When Repurchases Resemble Dividends: Frequent versus Infrequent Repurchasers
AuthorNemani, Alok K.
Post earnings announcement drift
AdvisorKahle, Kathleen M.
MetadataShow full item record
PublisherThe University of Arizona.
RightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction, presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
AbstractI demonstrate that frequent repurchasers resemble dividend payers and their repurchases are sticky and inflexible, like dividends. In contrast, infrequent repurchasers follow a flexible buyback policy and quickly respond to earnings changes. Investors react more positively to infrequent repurchasers’ repurchase announcements and actual repurchases, consistent with stronger signals of undervaluation and improvement in future prospects. Frequent repurchasers, however, repurchase to offset dilution caused by equity compensation. The shift in repurchase behavior from infrequent to frequent explains why traditional motives such as flexibility and signaling fail to describe the recent surge in repurchases.
Degree ProgramGraduate College