It's just a matter of time: Abnormal returns after firms stop repurchasing shares

Abstract

This paper uses a novel method to assess the timing of corporate share repurchases by examining abnormal returns after firms stop repurchasing shares. This method reveals several new findings. First, repurchasing firms experience positive abnormal returns only after they stop repurchasing shares. Second, the impact of repurchase timing is underestimated when abnormal returns are estimated after all repurchases. Third, there is evidence that frequent repurchasers and large firms time their repurchases, but only when measuring abnormal returns after they stop repurchasing shares. These findings have important implications for future research and regulation surrounding share repurchases.