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Cross-sectional differences in the liquidity effects of open market share repurchases

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Abstract

I examine liquidity changes associated with open market share repurchases, with the focus on potential cross-sectional variations of liquidity effects. I hypothesize that a liquidity change, either a decrease or an increase, will be larger in a firm with a higher degree of pre-announcement information asymmetry. Results suggest that the null hypothesis of no liquidity change cannot be rejected. In particular, there is no evidence for cross-sectional variation of liquidity changes across firms with differing degrees of information asymmetry.

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Authors and Affiliations

  1. College of Business Administration, San Diego State University, 5500 Campanile Drive, 92182-8236, San Diego, CA

    Jaemin Kim

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  1. Jaemin Kim
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Correspondence to Jaemin Kim.

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Special/thanks go to Kim Woo Choong, former chairman of DAEWOO Group, and Park Chung Kil for their support.

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Kim, J. Cross-sectional differences in the liquidity effects of open market share repurchases. J Econ Finan 29, 1–31 (2005). https://doi.org/10.1007/BF02761540

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