Market Micrsotructure Changes Around Accelerated Share Repurchase Announcements

Kulchania, Manoj

doi:10.1111/j.1475-6803.2013.12004.x

Cited by 9 publications

(4 citation statements)

References 41 publications

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“…This problem leads to a lower rate of share repurchase program completion. Investigating the relatively new accelerated share repurchase announcements, where an investment bank guarantees the repurchase based on an agreed price, Kulchania () finds improvements in stock liquidity (rise in market depth, bid size, offer size) upon accelerated share repurchase announcement.…”

Section: Background and Literature Reviewmentioning

confidence: 99%

Off‐Market Buybacks in Australia: Evidence of Abnormal Trading around Key Dates

Yong

Brown

2014

Int Rev Finance

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Off-market share buybacks in Australia are often structured with the buyback price comprising a large dividend component (which may carry imputation tax credits) and a small capital component. This unique structure has the consequence that institutions on low tax rates stand to benefit most from selling shares into the buyback. In this article, we explore evidence of abnormal trading activities around key dates in the conduct of off-market buybacks and investigate the drivers of these activities. We find evidence of abnormal trading activities around the initial announcement and the final announcement dates of the buyback. The significant differences in abnormal volumes between the buybacks with and without imputation tax credits highlight the importance of tax motivations in explaining abnormal trading activities in the shares of companies conducting off-market buybacks, and are consistent with observed buying pressure around the announcement of the buyback.

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Section: Background and Literature Reviewmentioning

confidence: 99%

Off‐Market Buybacks in Australia: Evidence of Abnormal Trading around Key Dates

Yong

Brown

2014

Int Rev Finance

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“…For our second and fourth hypotheses, we follow Fenn and Liang (2001) and Kulchiania (2013) and modify Equation 1 to provide the dividend payout model. Dividend yield is now the dependent variable, while stock repurchases is one of the independent variables.…”

Section: Methodsmentioning

confidence: 99%

The Unintended Effects of Financial Accounting Standard 123R on Stock Repurchase and Dividend Activity

Golden

Kohlbeck

2017

Journal of Accounting, Auditing & Finance

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We investigate whether Financial Accounting Standard (FAS) 123R, which requires a firm to recognize its stock-based compensation at fair value, affects the firm’s stock repurchase activity. Specifically, we examine the effect of the standard on the incentive to substitute stock repurchases for dividends. As stock-option holdings increase, firms alter their payout composition; rather than offering dividends, they increase their stock repurchases to return cash to their shareholders. Prior research also indicates that stock repurchases are used to manage earnings per share (EPS). Managers are likely concerned that FAS 123R negatively impacts earnings, as firms must now record stock-based compensation at fair value. Overall, we find that FAS 123R is associated with an increase in stock repurchases and that this effect is greater the higher the level of management stock options; the impact on dividend yields, however, is less pronounced. Our study reveals the unintended economic consequences of a change in accounting by demonstrating its effects on how firms return cash to their shareholders.

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“…Some argue that only firms that have the ‘requisite liquidity’ in their shares conduct repurchases (e.g., Bargeron et al, 2011; Brockman et al, 2008; Kulchania, 2013). More recently, Hillert et al (2016) have argued that share repurchases themselves enhance the liquidity in shares.…”

Section: Disclosure Environment Motivations For Share Repurchases And...mentioning

confidence: 99%

Flexibility in share repurchases: Evidence from UK

Kulchania

Sonika²

2022

Euro Fin Management

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Although firms cite flexibility as important when repurchasing shares, we know little about how or why firms vary repurchases. We use an extensive sample of daily repurchase transactions from the United Kingdom to investigate how the number of repurchase days and volumes of shares repurchased change based on several known motivations. We find that stock price changes, liquidity, leverage, takeover activity and earnings per share targets impact share repurchasing patterns. Further, we compare actual repurchases to alternative share accumulation strategies and find that firms utilize flexibility without paying higher costs.

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Market Micrsotructure Changes Around Accelerated Share Repurchase Announcements

Cited by 9 publications

References 41 publications

Off‐Market Buybacks in Australia: Evidence of Abnormal Trading around Key Dates

Off‐Market Buybacks in Australia: Evidence of Abnormal Trading around Key Dates

The Unintended Effects of Financial Accounting Standard 123R on Stock Repurchase and Dividend Activity

Flexibility in share repurchases: Evidence from UK

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