market reaction

We compare accelerated share repurchases (ASR) and open market repurchases (OMR) between 2004 and 2007. ASR firms had lower market-to-book ratios, less cash, and higher managerial entrenchment. ASR firms were subject to more takeover rumors, influencing their choice. ASR firms experienced positive returns and reduced takeover probability.

Analyzing Australian companies’ stock repurchases based on their motivations, we find that firms with undervaluation motives have a more positive stock price reaction. These firms repurchase fewer shares and perform better in the year following repurchases. Undervaluation motives signal strength, and management statements hold value for the market.

We analyze the SEC’s proxy access rule and its impact on shareholder wealth focusing on firms’ governance characteristics. Firms with a high probability of being targeted have more negative returns while independent directors and non-cash compensation positively influence the market’s reaction. Smaller boards have less negative impact, suggesting the rule isn’t seen as value-enhancing by marginal shareholders.

We examine SEC’s director nomination rule’s wealth effects. Results contradict shareholder empowerment creating value: Abnormal returns are negative for events increasing passage probability.