Activist investors and open market share repurchases
This study examines the role of activist investors in firms’ decisions to conduct open market share repurchases. Compared with firms making ordinary share repurchases, firms making activist-involved repurchases have more cash holdings, are more undervalued, experience better subsequent stock perform...
Saved in:
| Published in: | Journal of banking & finance Vol. 107; p. 105614 |
|---|---|
| Main Authors: | , , |
| Format: | Journal Article |
| Language: | English |
| Published: |
Elsevier B.V
01-10-2019
|
| Subjects: | |
| Online Access: | Get full text |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | This study examines the role of activist investors in firms’ decisions to conduct open market share repurchases. Compared with firms making ordinary share repurchases, firms making activist-involved repurchases have more cash holdings, are more undervalued, experience better subsequent stock performance and similar improvements in operating performance, and eventually repurchase more shares. Moreover, repurchasing firms in which an activist investor claims to take a passive role exhibit no undervaluation, and repurchasing firms that make multiple repurchases exhibit share undervaluation only in repurchases where an activist is involved. In all, our findings suggest that activist-involvement is associated with improved corporate repurchase decisions. |
|---|---|
| ISSN: | 0378-4266 1872-6372 |
| DOI: | 10.1016/j.jbankfin.2019.105614 |