Conflicting signals: A study on firms announcing share repurchases soon after seasoned equity offerings

This study examines companies that announce open market share repurchases after seasoned equity offerings (SEO‐OMRs). This study finds that SEO‐OMRs have worse post‐OMR announcement returns, face a sharper decline in stock prices before OMR announcements, and have lower costs of buying back stocks....

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Bibliographic Details
Published inAccounting and finance (Parkville) Vol. 65; no. 1; pp. 773 - 791
Main Author Wang, Jin‐Ying
Format Journal Article
LanguageEnglish
Published Clayton Blackwell Publishing Ltd 01.03.2025
Subjects
Market timing
seasoned equity offerings
share repurchases
stock returns
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Summary:This study examines companies that announce open market share repurchases after seasoned equity offerings (SEO‐OMRs). This study finds that SEO‐OMRs have worse post‐OMR announcement returns, face a sharper decline in stock prices before OMR announcements, and have lower costs of buying back stocks. The study infers that firms announce an OMR soon after conducting an SEO to ensure market timing. The literature contains no evidence of SEO‐OMRs, and this study fills this gap. The findings of this study suggest that investors use SEOs as credible signals when deciding to purchase OMR stocks.
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ISSN:0810-5391
1467-629X
DOI:10.1111/acfi.13348