EU regulation and open market share repurchases: New evidence

This paper re-examines the impact of the EU Market Abuse Directive (MAD) on the market reaction around share repurchase announcements. We use a unique hand-collected dataset of firms listed on the Athens Stock Exchange, and we find evidence that contrasts with previous conclusions for large European...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Drousia, Angeliki, Episcopos, Athanasios, Leledakis, George N, Pyrgiotakis, Emmanuil
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2020
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Summary:This paper re-examines the impact of the EU Market Abuse Directive (MAD) on the market reaction around share repurchase announcements. We use a unique hand-collected dataset of firms listed on the Athens Stock Exchange, and we find evidence that contrasts with previous conclusions for large European economies. The implementation of MAD is followed by a significant improvement in announcement abnormal returns, an improvement which remains even when we control for several firm-specific factors, industry fixed effects, and potential endogeneity issues. We attribute our findings to cross-country differences in institutional framework and pre-MAD existing national laws. Collectively, our results support the notion that EU directives do not have a uniform effect across Member States. Thus, the impact of such reforms should also be examined in individual capital market studies.