Please use this identifier to cite or link to this item: https://ktisis.cut.ac.cy/handle/10488/12960
Title: Managerial overconfidence and the buyback anomaly
Authors: Andreou, Panayiotis 
Cooper, Ilan 
De Olalla Lopez, Ignacio Garcia 
Louca, Christodoulos 
Major Field of Science: Social Sciences
Field Category: Economics and Business
Keywords: Share repurchase;Buybacks;Overconfidence;Asymmetric information;Abnormal returns
Issue Date: Dec-2018
Source: Journal of Empirical Finance, 2018, vol. 49, pp. 142-156
Volume: 49
Start page: 142
End page: 156
Journal: Journal of Empirical Finance 
Abstract: While positive, long-run abnormal returns following share repurchase announcements are substantially lower when CEOs are overconfident. This effect is particularly strong for (i) difficult to value firms, such as small, young, non-dividend paying, distressed, and having negative earnings firms, (ii) firms with poor past stock return performance and high book-to-market ratio, indicators of possible overreaction to bad news, and (iii) financially constrained firms. Overall, these results are consistent with the mispricing hypothesis as a motive for repurchases and as an explanation for the buyback anomaly. Additionally, irrespective of the CEO’s level of confidence, abnormal returns are considerably larger for financially constrained firms, implying their managers require larger undervaluation due to the higher cost of capital.
ISSN: 0927-5398
DOI: 10.1016/j.jempfin.2018.09.005
Rights: © Elsevier
Type: Article
Affiliation : Cyprus University of Technology 
Durham University Business School 
BI Norwegian Business School 
Appears in Collections:Άρθρα/Articles

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