The Price Effect of Stock Repurchases: Evidence from Dual Class Firms

We examine a sample of dual-class firms to isolate the magnitude and duration of the demand-driven price effect from stock repurchases. In this novel setting, the non-repurchased class serves as a near-perfect counterfactual to the repurchased class and controls for private information about firm value contained in the repurchases. The average repurchase in our sample, 0.30% of outstanding shares within a month, increases the stock price by 40 to 70 basis points relative to the non-repurchased class of stock. The effect dissipates completely over the subsequent month unless extended by continued repurchases. This small, short-lived price effect leaves little scope for CEOs to benefit from value-destroying repurchases motivated by self-interest. This paper was accepted by Victoria Ivashina, finance.

• 저널Management Science · 67(10) · 6568–6580
• 토픽Corporate Finance and Governance · Accounting
• DOI10.1287/mnsc.2021.4066
• 저자Leonce Bargeron, Michael Farrell