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The effects of executive compensation and outside monitoring on firms’ pre-repurchase disclosure behavior and post-repurchase performance

  • Sheng-Syan Chen
  • Robin K. Chou
  • Yun-Chi LeeEmail author
Original Research
  • 13 Downloads

Abstract

We show that corporate governance mechanisms play an important role in controlling managers’ opportunistic behavior. Low executive equity compensation and a high intensity of outside monitoring help to discourage undesirable self-interested disclosure decisions by management before share repurchases. Corporate governance mechanisms also have a significant impact on long-run abnormal stock prices and operating performance. Firms that manipulate pre-repurchase disclosures experience positive long-term abnormal stock returns. However, we do not find that these firms experience positive long-run operating performance. Corporate governance mechanisms significantly attenuate the tendency toward negative pre-repurchase disclosures and their effects on stock prices and operating performance.

Keywords

Corporate governance Repurchase Voluntary disclosure Long-term performance 

JEL Classification

G14 G34 G35 

Notes

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© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Finance, College of CommerceNational Chengchi UniversityTaipeiTaiwan
  2. 2.Department of Finance, School of ManagementMing Chuan UniversityTaipeiTaiwan

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