Does the type of ownership control matter: Evidence from share repurchases programs

Abstract

In this study, we examine effect of stock repurchase programs on firm performance and the importance of the ownership structure in explaining this relationship. The primary result shows that higher levels of repurchases in one year are associated with higher level of performance in the subsequent year. This finding is robust to different ownership structure. Besides, the finding that higher level of repurchases are followed by better financial performance in closely held firm could reflect manager‟s desire to signal undervaluation of stock. However, in the widely held firm the result are not consistent with the signalling hypothesis.