Buybacks Around the World

October 8, 2013 Leave a comment

Buybacks Around the World

Alberto Manconi Tilburg University

Urs Peyer INSEAD – Finance

Theo Vermaelen INSEAD – Finance

September 2, 2013
INSEAD Working Paper No. 2013/101/FIN

Abstract: 
This paper documents that outside the U.S. short-term returns around share repurchase announcements are positive, although only about half the size as in the U.S. Long-run abnormal returns after buyback announcements follow the same pattern in non-U.S. firms as document by prior literature for U.S. firms extending the buyback puzzle to the global level. Cross-country differences in corporate governance quality and regulatory differences can explain variation in the short- and long-run abnormal returns. Globally, long-run abnormal returns are related to an undervaluation index (Peyer and Vermaelen, 2009, RFS) consistent with the interpretation that managers are able to time the market.

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