Abstract
We explore the link between open market share repurchases (OMRs) and asymmetric information - based on financial reporting quality - and find opaque firms experience positive abnormal returns twice the magnitude of transparent firms. These significant differences remain after controlling for governance, earnings management, and firm characteristics. We document significantly positive long-run post-announcement returns for opaque firms, but not for transparent firms. We find takeover activity and premiums rise with repurchase activity by opaque firms and may explain some of the wealth effects. Our results suggest that asymmetric information plays an important role in the wealth effects around OMRs.
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