Authors: ANGELIKI DROUSIA, ATHANASIOS EPISCOPOS, GEORGE LELEDAKIS

Title: Announcements of Actual Share Repurchases in Greece: Market Reaction and Firm’s Motives

Abstract

This paper examines the stock market reaction around the announcement date of actual share repurchases, the factors that affect the size of that reaction, and the motives behind share acquisitions. A unique, hand-collected dataset is used including public announcements of companies whose stocks trade on the Athens Stock Exchange. Share repurchase program authorizations provide the company the option to repurchase a maximum allowed amount of shares over a designated period. Although the authorization announcements are greeted favorably by the market, the announcements of actual share buybacks are followed by negative and statistically significant abnormal returns. According to the current regulation rules, firms are required to publicly disclose their repurchase activity on a daily basis. We observe that the mean cumulative abnormal return (CAR) is negative and statistically significant for the days preceding the announcement. The short-term CAR following the repurchases is positive but not statistically significant. The results are in line with the price support hypothesis.