Changes in Market Response to Stock Repurchases during the COVID-19 Crisis

2021 ◽  
Vol 50 (4) ◽  
pp. 411-437
Author(s):  
Kyung Hee Park
Keyword(s):  
Stock Prices ◽  
Market Reaction ◽  
Listed Companies ◽  
Shareholder Wealth ◽  
Stock Repurchases ◽  
Market Response ◽  
Stock Repurchase ◽  
South Korean ◽  
The Impact ◽  
A Company

This study analyzed the impact of COVID-19, which, in 2020, globally increased uncertainty about the stock repurchase of South Korean listed companies. The results suggest that the market reaction to stock repurchases during the COVID-19 period was significantly subdued. In particular, the market reaction to KOSPI companies, on stock repurchase, was positive, while it was negative in the case of KOSDAQ companies. It has also been reported that the market ranks lower on the reliability of the signal after the onset of COVID-19. This means that if a company discloses a stock repurchase in a situation where the value of the market as a whole has declined, it cannot be accepted as an undervalued signal. Furthermore, it was revealed that the market responded more positively to the announcement of repurchases by companies that had actively managed shareholder wealth by repeatedly making stock repurchases before COVID-19. These results suggest that companies should always be aware of this, as the market response to stock repurchases in market shockers such as COVID-19 is weaker. Additionally, managers can manage their stock prices more effectively through stock repurchases during market shockers if they consistently manage their stock prices through stock repurchases when companies are undervalued.

scholarly journals Incomplete Share Repurchase Programs in Vietnam: Completion Rates and Short-Term Returns

2020 ◽  
Vol 8 (3) ◽  
pp. 57
Author(s):  
Kien Cao ◽  
Thuy Nguyen ◽  
Hong Nguyen ◽  
Hien Bui
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Stock Prices ◽  
Management Practices ◽  
Investor Protection ◽  
Stock Repurchases ◽  
Tobit Regression ◽  
Stock Repurchase ◽  
The Impact ◽  
Repurchase Programs

Stock repurchases have become a preferred method of distributing cash to stockholders. However, given the high level of information asymmetry and weak corporate governance as well as poor investor protection in Vietnam, many Vietnamese firms use stock repurchases as a tool to manipulate stock prices in the market. Using event study methodology and Tobit regression models, this study examines the stock price behaviors surrounding the event dates and the impact of earnings management activities prior to the stock repurchases on the completion of repurchase announcements in Vietnam. The results show that earnings management practices prior to stock repurchase programs, the percentage of intended buyback shares, and CEO characteristics have a significant impact on the completion of these repurchase programs. Moreover, most of the windows surrounding the event dates do not have any significant abnormal movement of the stock prices. A plausible explanation is that, due to weak corporate governance and poor investor protection, Vietnamese firms send lots of misleading signals through various corporate activities, especially stock repurchase programs. Thus, these signals have less meaning to investors.

scholarly journals The Impact of International Oil Prices on the Stock Price Fluctuations of China’s Renewable Energy Enterprises

Energies ◽  
2019 ◽  
Vol 12 (24) ◽  
pp. 4630 ◽  
Author(s):  
Cody Yu-Ling Hsiao ◽  
Weishun Lin ◽  
Xinyang Wei ◽  
Gaoyun Yan ◽  
Siqi Li ◽  
...  
Keyword(s):  
Renewable Energy ◽  
Stock Prices ◽  
Stock Price ◽  
Capital Investment ◽  
Spillover Effect ◽  
Oil Prices ◽  
Listed Companies ◽  
Oil Price ◽  
Price Fluctuations ◽  
The Impact

In order to address a series of issues, including energy security, global warming, and environmental protection, China has ranked first in global renewable investment for the seventh consecutive year. However, developing a renewable energy industry requires a significant capital investment. Also, the international oil price fluctuations have an important impact on the stock prices of renewable energy firms. Thus, in order to provide implications for market investment as well as policy recommendations, this paper studied the spillover effect of international oil prices on the stock prices of China’s renewable energy listed companies. We used a Vector Autoregressive (VAR) model with innovations using a Factor-GARCH (Generalized Autoregressive Conditional Heteroskedasticity) process to evaluate the impact of market co-movements and time-varying volatility and correlation between the international oil price and China’s renewable energy market. The results show that the international oil price has a significant price spillover effect on the stock prices of China’s renewable energy listed companies. Moreover, the fluctuations of international oil prices have an influence on the stock price variations of Chinese renewable energy listed companies.

Sport sponsorship announcement and stock returns: a meta-analytic review

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Youngbum Kwon ◽  
T. Bettina Cornwell
Keyword(s):  
Stock Market ◽  
Shareholder Wealth ◽  
Event Studies ◽  
Share Price ◽  
Market Response ◽  
Sport Sponsorship ◽  
Event Window ◽  
Content Type ◽  
Analytic Review ◽  
The Impact

PurposeGiven the public availability of secondary data on investments in events such as the Olympics, FIFA World Cup and professional sports, event studies that measure stock market response to these investments have grown. Previous findings are mixed, however, with some studies suggesting that the announcement of sponsorship contracts is a positive event and others finding detrimental effects of the announcement on shareholder value. This study aims to analyze the mixed findings from event studies in sport sponsorship to determine if sponsorship announcements influence stock market response.Design/methodology/approachThe meta-analysis examines more than 20 years of research on event studies in sponsorship (34 studies).FindingsThe overall results show a positive, but non-significant effect of partnership deal announcements on shareholder wealth. Further analysis considers the effects of sponsorship announcements by each type of event window to see the impact of the announcement relative to time (pre-announcement, announcement day, post-announcement and pre- to post-announcement). This closer examination of the event window shows that stock prices of sponsoring organizations increased in the pre-announcement window.Originality/valueQuantitative meta-analytic findings indicate that information about sponsorship deals appears to leak to share markets and positively influence share price. This finding suggests that sponsoring the sports and events found in these event studies is seen as value enhancing for sponsoring firms.

scholarly journals Stock Spams: Another Kind Of Stock Prices Manipulation

2012 ◽  
Vol 29 (1) ◽  
pp. 79 ◽  
Author(s):  
Taoufik Bouraoui ◽  
Mohamed Mehanaoui ◽  
Bouchaib Bahli
Keyword(s):  
Event Study ◽  
Stock Prices ◽  
Market Reaction ◽  
Font Size ◽  
Event Window ◽  
Parametric Test ◽  
Study Methodology ◽  
Penny Stocks ◽  
The Impact ◽  
Event Study Methodology

<span style="font-family: Times New Roman; font-size: small;"> </span><p style="margin: 0in 0.5in 0pt; text-align: justify;" class="MsoNormal"><span style="font-family: Times New Roman;"><span lang="EN-GB" style="color: black; font-size: 10pt; mso-ansi-language: EN-GB;">This research investigates the market reaction to an information-based manipulation called stock spams. The impact is focused on the liquidity variable which is measured by </span><span lang="EN-GB" style="font-size: 10pt; mso-ansi-language: EN-GB;">Amivest ratio. Using the event study methodology on a sample of penny stocks for the period February 2006 through October 2008, our findings suggest <span style="color: black;">positive and significant abnormal liquidities for stocks targeted by manipulators during the event window. Robustness checks were performed using a non-parametric test. These results support the thesis that this kind of manipulation is a very flourishing business that manipulators exploit by simply purchasing stocks at low prices and selling them at higher prices. </span></span></span></p><span style="font-family: Times New Roman; font-size: small;"> </span>

scholarly journals Short-Term Price Effects of Stock Repurchases in Turkish Capital Markets

2015 ◽  
Vol 7 (12) ◽  
pp. 29 ◽  
Author(s):  
Burak Pirgaip ◽  
Semra Karacaer
Keyword(s):  
Capital Markets ◽  
Stock Prices ◽  
Company Law ◽  
Stock Repurchases ◽  
Open Market ◽  
Short Term ◽  
Stock Repurchase ◽  
Listed Firms ◽  
Commercial Code ◽  
Signaling Hypothesis

Stock repurchase, as a corporate finance tool and a substitute for cash dividends, plays an important role in distributing excess cash. Following a prohibited period due to its potentially negative outcomes for shareholders and creditors, stock repurchase has recently been regulated within the company law systems of many countries pursuant to its increasing popularity in satisfying special financing requirements of companies. That the regulatory improvements have removed the uncertainty inherent in such transactions has increased the volume of, especially, the open market stock repurchases. Turkish legislation, <em>i.e.</em> <em>Commercial Code and Capital Markets Law</em>, has latterly been updated in accordance with EU acquis communautaire in order to allow stock repurchase for listed firms. We analyse movements in stock prices after stock repurchase transactions in order to make inferences about why stock repurchase is used and what its impacts/signals are in Turkish market at their infancy stage. Having followed a standard event study methodology, the results reveal that investor reaction to stock repurchase transactions is generally positive in the short-term. These results support the notion of a signaling hypothesis as a motivator behind stock repurchase decisions.

scholarly journals The Impact of Second Generation National Health Insurance on Stock Prices- based upon Supplementary Premium Charges on Dividend Income

2016 ◽  
Vol 8 (2) ◽  
pp. 205
Author(s):  
Ku-Jun Lin ◽  
Hai-Ming Chen ◽  
Hsiu-Mei Chen ◽  
Wen-Chen Lo
Keyword(s):  
Health Insurance ◽  
National Health Insurance ◽  
National Health ◽  
Stock Prices ◽  
Second Generation ◽  
Listed Companies ◽  
Negative Influence ◽  
Seemingly Unrelated Regression ◽  
National Health Insurance System ◽  
The Impact

<p>The purpose of this study is to explore the influences of second generation National Health Insurance (NHI) on the stock prices of listed companies in Taiwan. We employed the Event Study methodology to analyze the impact on listed companies’ stock prices during the period of NHI Act amendment. Moreover, with a seemingly unrelated regression model, we discovered whether or not the new National Health Insurance system exerts different influences on different industries.</p><p>The main results are as follows. First, the second generation NHI affects the stock prices of listed companies during the NHI act revision period. Secondly, the second generation NHI has different influences on industries. One possible reason is that the second generation NHI’s charges of supplementary premium on dividend income makes investors feel pessimistic about this new insurance policy. This issue alters investment decisions and has a negative influence on Building Material and Construction Industry.</p><p> </p>

scholarly journals The Impact of Tax Amnesty Announcement towards Share Performance and Market Reaction in Indonesia

2018 ◽  
Vol 7 (2) ◽  
pp. 39
Author(s):  
Lidya Agustina ◽  
Yuliana Gunawan ◽  
Windawaty Chandra
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Trading Volume ◽  
Stock Return ◽  
Market Reaction ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Test Method ◽  
Tax Amnesty ◽  
The Impact

The Indonesian Government reviewed back the tax amnesty in 2016. Various reactions came up along with the announcement of tax amnesty, the investors did not accept- which led to the announcement of the Tax Forgiveness regulation through the market reactions and stock market performances in Indonesia Stock Exchange. This research is to analyze event study using information based on government-related announcements to show the impact of the new regulation towards stock performance and market reaction. The effect of the announcement will be seen from the changes in stock-prices or stock-returns that provide abnormal returns in the event period as well as market reaction which reflected in trading volume. This research used stock-return data and trading volume from all companies listed in IDX in 2016 and analyzed using the Paired Sample T-Test method. The result of this research shows there are differences among the average of stock-return, average abnormal-return of stock, and stock trading volume before and after the tax amnesty announcement.

scholarly journals Credit Rating Changes and Stock Market Reaction in the Kingdom of Bahrain

2016 ◽  
Vol 8 (8) ◽  
pp. 23 ◽  
Author(s):  
Marwan M. Abdeldayem ◽  
Ramzi Nekhili
Keyword(s):  
Stock Market ◽  
Event Study ◽  
Stock Prices ◽  
Banking Sector ◽  
Credit Rating ◽  
Market Reaction ◽  
Stock Market Reaction ◽  
Rating Changes ◽  
The Impact

<p>Between 2014 and 2015, the oil price almost halved. Since then, it has fallen a further 40%. Consequently, Moody’s Investors Service has downgraded Bahrain’s long-term issuer rating from Baa3 to Ba1with a negative outlook and placed it on review for further downgrade. In this context, previous literature reaches no agreement about the impact of credit rating changes on stock prices. Some studies indicate that credit rating changes do not affect stock prices, while others conclude they do. Therefore, this study aims to examine whether credit rating change has a significant impact on Bahraini stock prices. We conducted an event study to analyze stock market reaction to such news in the Kingdom of Bahrain. Even though Bahrain has witnessed a series of sovereign downgrades over the past five years, the latest downgrading event in February 17, 2016, has been followed by a credit rating downgrade of its banking sector in March 7, 2016. Hence the choice of the sample period of the event study includes both these downgrading events over the period of study from January 2, 2014 till March 22, 2016. Three sectors were selected from the Bahrain all share index: banks, service and industrial. The findings of the study reveal that sovereign rating downgrade has some mixed pre-announcement and post-announcement effects and credit rating downgrade provides useful information. Overall, the results indicate that downgrades and negative outlook announcements have an adverse impact on long-term equity returns, but little impact on short-term performance.</p>

scholarly journals Stock Price Prediction Using LSTM on Indian Share Market

10.29007/qgcz ◽  
2019 ◽  
Author(s):  
Achyut Ghosh ◽  
Soumik Bose ◽  
Giridhar Maji ◽  
Narayan Debnath ◽  
Soumya Sen
Keyword(s):  
Stock Market ◽  
Stock Prices ◽  
Stock Price ◽  
Short Term Memory ◽  
Investor Sentiment ◽  
Spot Price ◽  
Physical Factors ◽  
Stock Price Prediction ◽  
The Impact ◽  
A Company

Predicting stock market is one of the most difficult tasks in the field of computation. There are many factors involved in the prediction – physical factors vs. physiological, rational and irrational behavior, investor sentiment, market rumors,etc. All these aspects combine to make stock prices volatile and very difficult to predict with a high degree of accuracy. We investigate data analysis as a game changer in this domain.As per efficient market theory when all information related to a company and stock market events are instantly available to all stakeholders/market investors, then the effects of those events already embed themselves in the stock price. So, it is said that only the historical spot price carries the impact of all other market events and can be employed to predict its future movement. Hence, considering the past stock price as the final manifestation of all impacting factors we employ Machine Learning (ML) techniques on historical stock price data to infer future trend. ML techniques have the potential to unearth patterns and insights we didn’t see before, and these can be used to make unerringly accurate predictions. We propose a framework using LSTM (Long Short- Term Memory) model and companies’ net growth calculation algorithm to analyze as well as prediction of future growth of a company.

scholarly journals Financing Constraints and Stock Price Volatility Empirical Evidence from Shanghai and Shenzhen A-share listed Companies

2021 ◽  
Vol 235 ◽  
pp. 01029
Author(s):  
Xuan Xiang ◽  
Fei Dong ◽  
Junxiu Chen
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Price Volatility ◽  
Listed Companies ◽  
Practical Significance ◽  
Financing Constraints ◽  
Cross Sectional ◽  
Stock Price Volatility ◽  
The Impact ◽  
A Share

Based on the theoretical analysis of financing constraints and stock price volatility, the hypothesis of “corporate financing constraints inhibiting corporate stock price volatility” is proposed. After data cleaning, the cross-sectional data based on A-share was used to make an empirical analysis of the relationship between financing constraints and stock price volatility of listed companies in 2018 through regression model. The study found that when companies relax financing constraints, due to widespread overinvestment, the stock price of companies will fluctuate more. In addition, we have shown that by replacing the return of financing constraint indicators and the regression of subsamples based on enterprise size, market type and ownership, the conclusion of the study is more robust. The research reveals the mechanism of the impact of financing constraints on the volatility of corporate stock prices. The conclusions have practical significance for investors, corporations and relevant regulatory authorities.

Sign in / Sign up

Export Citation Format

Share Document