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Open AccessArticle

What Drives the Declining Wealth Effect of Subsequent Share Repurchase Announcements?

1
Lee Kong Chian School of Business, Singapore Management University, Singapore 178899, Singapore
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School of Economics and Finance, Massey University, Auckland 0745, New Zealand
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Department of Finance, Faculty of Business, Economics and Law, Auckland University of Technology, Private Bag 92006, Auckland 1142, New Zealand
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UniSA Business, University of South Australia, Adelaide 5001, Australia
*
Author to whom correspondence should be addressed.
J. Risk Financial Manag. 2020, 13(8), 176; https://doi.org/10.3390/jrfm13080176
Received: 16 July 2020 / Revised: 29 July 2020 / Accepted: 5 August 2020 / Published: 7 August 2020
(This article belongs to the Special Issue Corporate Finance)
Recent academic studies document that open market share repurchase announcements in the United States generate significantly lower returns than those reported in earlier studies. We find that the lower announcement return is associated with an increasing number of subsequent announcements in the more recent periods. Although the announcement period return from the initial announcement is positive, subsequent announcement returns are significantly decreasing. Further, we find that the decreasing returns of subsequent announcements are attributed to firms with negative past repurchase announcement returns. Our multivariate regression test results are consistent with the notion that the decreasing subsequent repurchase announcement returns are driven by hubris-endowed managers. View Full-Text
Keywords: open market share repurchase; hubris; cumulative announcement returns; endowed open market share repurchase; hubris; cumulative announcement returns; endowed
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MDPI and ACS Style

Ding, D.K.; Koerniadi, H.; Krishnamurti, C. What Drives the Declining Wealth Effect of Subsequent Share Repurchase Announcements? J. Risk Financial Manag. 2020, 13, 176.

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