Munich Personal RePEc Archive

Market Reaction to Stock Repurchases in Greece

Drousia, Angeliki and Episcopos, Athanasios and Leledakis, George N. (2016): Market Reaction to Stock Repurchases in Greece.

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Abstract

This paper examines open market stock repurchases by Greek firms, using a unique dataset covering the period 2000-2010. Positive and statistically significant cumulative average abnormal returns are observed around the date of repurchase program authorizations. Investors react more to authorizations of initial programs than to subsequent programs. After the implementation of the EU Market Abuse Directive in Greece, investors react more favorably to buyback announcements. The reason for initiating a repurchase program, as stated by the companies, is directly related to the market valuation of the program. The paper identifies the characteristics of firms that announce dividend changes, given the decision to initiate a stock buyback. The regression results appear to support the hypothesis of signaling undervaluation.

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