What Is the True Valuation Motive for Increasing Share Repurchases? An Analysis of Firm, Institutional and Short Selling Trading Behavior

2020 ◽  
Author(s):  
Jin Young Yang ◽  
Reuben Segara
Keyword(s):  
Short Selling ◽  
Share Repurchases ◽  
Trading Behavior

Firm, institutional and short sellers’ trading behavior around share repurchases

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Reuben Segara ◽  
Jin Young Yang
Keyword(s):  
Institutional Investors ◽  
Regression Models ◽  
Design Methodology ◽  
Short Selling ◽  
Share Repurchases ◽  
Panel Regression ◽  
Trading Behavior ◽  
Firm Level ◽  
Content Type ◽  
Short Sellers

PurposeThis study investigates the valuation motive for increasing share repurchases: the authors analyze the trading dynamics between short sellers, institutional investors and the firm itself around share repurchases.Design/methodology/approachThe authors examine the valuation motive for share repurchases through an analysis of firm, institutional and short sellers’ trading behavior. The firm-level panel regression models using firm-quarter observations in the sample period are estimated.FindingsThe authors find that firms repurchase more intensely against increased short selling and that institutional investors trade in parallel with the repurchasing firm.Originality/valueResults suggest that firms disagree with short sellers’ intrinsic valuation of the firm, which is consistent with findings of recent studies such as Muzere (2019) and Bargeron and Bonaimé (2020).

scholarly journals Mispricing of Book-Tax Differences and the Trading Behavior of Short Sellers and Insiders

2013 ◽  
Vol 89 (2) ◽  
pp. 511-543 ◽  
Author(s):  
Sabrina S. Chi ◽  
Morton Pincus ◽  
Siew Hong Teoh
Keyword(s):  
Stock Returns ◽  
Insider Trading ◽  
Short Selling ◽  
Data Availability ◽  
Large Set ◽  
Trading Behavior ◽  
Earnings Growth ◽  
The Public ◽  
Short Sellers ◽  
Abnormal Stock Returns

ABSTRACT We find evidence that investors misprice information contained in book-tax differences (BTDs), measured as the ratio of taxable income to book income, TI/BI. Low TI/BI predicts worse earnings growth and abnormal stock returns than high TI/BI. We find that short sellers and insiders arbitrage BTD mispricing, but the arbitrage is imperfect because of constraints on short selling and insider trading. Under SFAS No. 109 the predictability is stronger for TEMP/BI, the temporary component of TI/BI, which reflects greater managerial discretion. The results are incremental to a large set of known accruals-based anomaly predictors. We suggest that a sunshine policy of disclosing a reconciliation of book and taxable incomes can reduce mispricing of BTDs and improve capital market resource allocation. Data Availability: Data are obtained from the public sources as indicated in the text.

Does Stock Manipulation Distort Corporate Investment? The Role of Short Selling Costs and Share Repurchases

2020 ◽  
Author(s):  
Murillo Campello ◽  
Rafael Matta ◽  
Pedro A. C. Saffi
Keyword(s):  
Corporate Investment ◽  
Short Selling ◽  
Share Repurchases ◽  
Stock Manipulation

scholarly journals Future Lending Income and Security Value

2015 ◽  
Vol 50 (4) ◽  
pp. 869-902 ◽  
Author(s):  
Melissa Porras Prado
Keyword(s):  
Institutional Investors ◽  
Stock Prices ◽  
Negative Information ◽  
Short Selling ◽  
Security Prices ◽  
Trading Behavior ◽  
Security Value

AbstractI test the Duffie, Gârleanu, and Pedersen hypothesis that security prices incorporate expected future securities lending income. To determine whether institutional investors anticipate gains from future lending of securities, I examine their trading behavior around loan-fee increases. The evidence suggests that institutions buy shares in response to an increase in lending fees, and that this could explain the premium associated with high-lending-fee stocks. Expected future lending income affects stock prices, although the effect seems to be attenuated by the negative information that arises from short selling.

scholarly journals Research on the Impact of Short Selling Mechanism on Investors’ Positive Feedback Trading Behavior

2016 ◽  
Vol 07 (04) ◽  
pp. 434-440
Author(s):  
Yaoqiong Peng
Keyword(s):  
Positive Feedback ◽  
Short Selling ◽  
Trading Behavior ◽  
The Impact ◽  
Feedback Trading

An Internal Control Weakness: FERC and Investor's Trading Behavior

2017 ◽  
Vol 26 (3) ◽  
pp. 175-217
Author(s):  
Eunhye Jo ◽  
Haewon Moon
Keyword(s):  
Internal Control ◽  
Trading Behavior

Don't Sell Short Selling Short

CFA Magazine ◽  
2008 ◽  
Vol 19 (6) ◽  
pp. 14-14
Author(s):  
James Allen
Keyword(s):  
Short Selling

Short-Selling Bans around the World: Evidence from the 2007–09 Crisis

CFA Digest ◽  
2013 ◽  
Vol 43 (4) ◽  
Author(s):  
Nitin Joshi
Keyword(s):  
Short Selling ◽  
The World

Share Repurchases and Stock Valuation Models

CFA Digest ◽  
2010 ◽  
Vol 40 (1) ◽  
Author(s):  
Ahmed Sule
Keyword(s):  
Share Repurchases ◽  
Stock Valuation

Asymmetries in Short Selling of Exchange-Traded Funds and the Potential for Systemic Risk

CFA Digest ◽  
2012 ◽  
Vol 42 (3) ◽  
pp. 146-148
Author(s):  
Claire Emory
Keyword(s):  
Systemic Risk ◽  
Short Selling ◽  
Exchange Traded Funds
Sign in / Sign up

Export Citation Format

Share Document