Review of Quantitative Finance and Accounting

, Volume 53, Issue 3, pp 871–894 | Cite as

Managerial ability, forecasting quality, and open-market repurchase program completion

  • Jian CaoEmail author
  • Yun Cheng
  • Joanna Golden
  • Joseph H. Zhang
Original Research


Prior research suggests that managers often fail to complete announced open market repurchase (OMR) plans due to uncertainty in the firm’s future cash flows. Although high-ability managers should manage cash flows more effectively to complete share reacquisitions, there is little evidence to support this idea. This paper investigates whether CEOs with superior ability to efficiently manage corporate resources are associated with higher OMR completion rates. Our main findings are that OMR program completion rates increase with managerial ability and that the association is further moderated by the quality of management earnings forecasts. Cross-sectional analyses indicate that the positive associations are more pronounced in firms with higher cash flow volatility and fewer rent extraction opportunities. Our results imply that the repurchase completion rate is potentially an observable signal of managers’ broader ability to forecast and adapt to uncertain cash flows during the repurchase period.


Managerial ability Management earnings forecasts Open-market stock repurchases 

JEL Classifications

D80 G30 M41 



We thank the editor, an anonymous referee, Peter Demerjian, Howard Griffin, Eunhee Kim, Kevin Pan, Changjiang Wang, and participants at the 2017 AAA Annual Meeting and the Accounting Conference at Temple University for helpful comments on previous versions of this paper. Cao acknowledges the financial support from the Stone Fellowship.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.School of AccountingFlorida Atlantic UniversityBoca RatonUSA
  2. 2.Department of Accounting and FinanceUniversity of West GeorgiaCarrolltonUSA
  3. 3.School of AccountancyThe University of MemphisMemphisUSA

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