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| Author: | Massa, M. Rehman, Z. Vermaelen, T. |
| Title: | Mimicking repurchases |
| Journal: | Journal of Financial Economics
2007 : JUN, VOL. 84:3, p. 624-666 |
| Index terms: | USA companies products markets competition signaling shares |
| Freeterms: | repurchases payout policy |
| Language: | eng |
| Abstract: | This paper deals with the firms' tendency of mimicing the repurchase announcements (hereafter as: rep-anns.) of their industry counterparts. It is argued that a firm, by repurchasing its shares, sends a positive signal about itself and a negative one about its competitors. Based on a broad sample of U.S. firms from 1984 to 2002, it is shown that, in concentrated industries, rep-anns. lower the stock price of the other firms in the same industry. Other firms react by repurchasing themselves to undo these negative effects. Repurchases are chosen as a strategic reaction to other firms' repurchase decisions etc. |
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