The Research on Repurchase Announcements of Open-Market Stock
In a repurchase program, different firms can obtain different gains when they announce a stock repurchase, so a firm needs to know whether announcement is an optimal choice. This paper presents a dynamic, two-player game model with imperfect information, analyzes its further equilibrium condition. The model shows that repurchase announcements have various effects on the firms. High-earnings firms choose to make announcements, whereas low-earnings ones are inclined not to announce.Finally, it gives empirical test for the model to validate the conclusion according to the data of China.
KeywordsHigh Earning Stock Repurchase Marginal Disutility Repurchase Program Repurchase Announcement
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