Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/30852
Title: Managerial timing and corporate liquidity : evidence from actual share repurchases
Authors: Brockman, P
Chung, DY
Keywords: Repurchase
Liquidity
Timing ability
Stock Exchange of Hong Kong
Issue Date: 2001
Publisher: Elsevier
Source: Journal of financial economics, 2001, v. 61, no. 3, p. 417-448 How to cite?
Journal: Journal of financial economics 
Abstract: We investigate the timing of open market share repurchases and the resultant impact on firm liquidity. Using the Stock Exchange of Hong Kong's unique disclosure environment, we identify the exact implementation dates for more than five thousand equity buybacks. We find that managers exhibit substantial timing ability. Consistent with the information-asymmetry hypothesis, bid-ask spreads widen and depths narrow during repurchase periods. We decompose bid-ask spreads and show that adverse selection costs increase substantially as market participants respond to the presence of informed managerial trading. Our findings provide additional insight into how markets process information and have significant implications for corporate payout and disclosure policies.
URI: http://hdl.handle.net/10397/30852
ISSN: 0304-405X
DOI: 10.1016/S0304-405X(01)00068-X
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