Professor of Finance
During the 1980s, U.S. firms announcing stock repurchase programs earned favorable long-run returns. Recently, concerns have been raised over the robustness of these findings. This concern comes at a time of explosive growth in repurchase programs. Thus, the authors study new evidence from the 1990s for 1,060 Canadian repurchase programs.Moreover, because of Canadian law, the authors can carefully track repurchase activity monthly. Similarly to the situation in the United States, the Canadian stock market discounts the information in repurchase announcements, particularly for value stocks.Completion rates in Canada are sensitive to mispricing. Trades also appear linked to price movements; managers buy more shares when prices fall.