Journal of Finance and Economics

Journal of Finance and Economics

ISSN: 2291-4951 (Print)    ISSN: 2291-496X (Online)

Volume 3 (2015), No. 2, Pages 22-39

DOI: 10.12735/jfe.v3i2p22

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Why do Firms Repurchase Shares? Evidence from Actual Share Repurchases

Xiaochun Liu1  Hao Wang2 

1Department of Economics, Finance, and Insurance & Risk Management, University of Central Arkansas, Conway AR, USA
2Model Development Department, Regions Bank, Birmingham AL, USA


To Cite this Article     Article Views: 946     Downloads: 618  Since deposited on 2015-07-27


In practice, the share repurchase announcement is not a commitment to managers. To this end, the large difference between the actual and announced share repurchases is often observed in markets. In this paper, we explore the implications from actual share repurchase activities, different from the existing methods which focus on the announcements of share repurchases and hence largely ignore the managers’ actual repurchasing activities. By considering actual share repurchases and controlling variables, the new empirical evidence found in this paper clearly supports the agency and investor divergence of opinion hypotheses, but not for the information asymmetry hypothesis.

JEL Classifications: G14, G20, G30

Keywords: information signaling; agency problem; Divergence of opinion; investor heteroscedasticity; information asymmetry; share repurchase

To Cite this Article: Liu, X., & Wang, H. (2015). Why do firms repurchase shares? Evidence from actual share repurchases. Journal of Finance and Economics, 3(2), 22-39.

Copyright © Xiaochun Liu & Hao Wang

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This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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Why do Firms Repurchase Shares? Evidence from Actual Share Repurchases