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share repurchases and the timing of voluntary disclosures
Paul Brockman, University of Missouri Columbia
Inder Khurana, University of Missour Columbia
Xiumin Martin, University of Missouri Columbia
ABSTRACT. In this paper, we examine managers’ voluntary disclosure around share repurchases. Specifically, we test Barclay and Smith’s (1988) conjecture that management delays the release of good news until after a share repurchase and accelerates the release of bad news before a share repurchase. Using samples constructed from SDC database and management forecasts from First Call database, we find that firms release bad news more frequently during one month prior to the initial authorization of share repurchase programs, and firms release bad news more frequently during one month prior to the beginning of actual share repurchase. In contrast, we find firms release good news more frequently during one month after completing share reacquisition. Taken together, our evidence is consistent with Barclay and Smith’s conjecture that managers use inside information and alter information flow to minimize share repurchase price.
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