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

Reuben Segara, University of Sydney
Jin Young Yang, Zayed University

Document Type

Article

Source of Publication

Managerial Finance

Publication Date

11-1-2021

Abstract

Purpose This 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/approach The 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. Findings The authors find that firms repurchase more intensely against increased short selling and that institutional investors trade in parallel with the repurchasing firm. Originality/value Results 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 Bonaime (2020).

ISSN

0307-4358

Publisher

Emerald Group Publishing Ltd

Disciplines

Business

Keywords

Share repurchases, Short selling, Institutional investors, Informed investors, G01, G12, G14, G34, G35

Indexed in Scopus

no

Open Access

no

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