Journal of Banking & Finance Vol. 37 No. 1 2013

Buyback behavior of initial public offering firms

Sheng-Syan Chen¹; Kim Wai Ho²; Chia-Wei Huang³; Yanzhi Wang¹

¹ National Taiwan University · ² Nanyang Technological University · ³ Yuan Ze University

Abstract

We examine the motives behind the share repurchase decisions of initial public offering (IPO) firms by studying the stock and operating performance after the IPO date. We find that IPO firms that announce repurchases within 3years of IPO dates exhibit poorer long-run abnormal operating performance than other IPO firms. These IPO firms also experience poorer stock return performance and downward analyst forecast revisions. Moreover, these firms show intensive insider selling transactions after the IPO date. These results for IPO announcing repurchase firms are consistent with the misleading hypothesis, which suggests that these IPO firms mislead investors by announcing repurchases as false signals.

DOI

10.1016/j.jbankfin.2012.08.006

Volume

37

Issue

1

Pages

32-42

Language

en

Sources

openalex crossref bibtex:phds-export.bib

Cite

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