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Open-Market Share Repurchase Programs and Bid-Ask Spreads on the NYSE: Implications for Corporate Payout Policy

Published online by Cambridge University Press:  06 April 2009

James M. Miller  and
John J. McConnell
James M. Miller
Affiliation:
College of Commerce and Industry, Clemson University, Clemson, SC 29634
John J. McConnell
Affiliation:
Krannert Graduate School of Management, Purdue University, West Lafayette, IN 47907
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Abstract

This study analyzes bid-ask spreads surrounding announcements of open-market share repurchase programs for a sample of 248 announcements of repurchase programs by NYSE firms over the period January 1984 through June 1988. The sample includes 158 announcements of new programs and 90 announcements regarding continuations of already existing programs. Contrary to the theory that spreads increase surrounding the announcement of open-market share repurchase programs, with both univariate and multivariate tests that control for changes in volume, changes in stock price volatility, and changes in the level of stock price, we find no evidence of an increase in spreads surrounding announcements of open-market share repurchase programs.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 30 , Issue 3 , September 1995 , pp. 365 - 382
Copyright
Copyright © School of Business Administration, University of Washington 1995

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