Abstract
<p class="MsoBodyText2" style="text-align: justify; margin: 0in 0.5in 0pt; tab-stops: .5in;"><span style="font-size: 10pt;"><span style="font-family: Times;">Significant positive stock price reaction to stock repurchase announcements has been well documented in the finance literature.<span style="mso-spacerun: yes;">&nbsp; </span>Most studies on repurchase focus on the average positive reaction; however, 30 percent of the repurchasing firms experience negative abnormal returns at announcement.<span style="mso-spacerun: yes;">&nbsp; </span>This study examines the apparent heterogeneity in the stock price reaction to stock repurchase.<span style="mso-spacerun: yes;">&nbsp; </span>The results show that the market reaction to repurchase announcements is determined by firm specific factors and is based on the overall costs and benefits analysis by the market of the stock repurchase program.<span style="mso-spacerun: yes;">&nbsp; </span>The results are consistent with conventional signaling models and agency theories.</span></span></p>
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