Abstract
Using U.S. data from 2003 to 2008, this study explores the information effects of the changes in information asymmetry of repurchasing firms and their business counterparties due to share repurchases on repurchasing firms’ stockholders’ wealth. We find that the information asymmetry of repurchasing firms decreases after repurchase announcements, which enhances their stockholders’ wealth (information premium effect). However, the information premium effect is offset by the relative information advantages gained by repurchasing firms’ business counterparties (relative information advantage effect), especially by their suppliers.
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