INFORMATION CONTENT OF STOCK REPURCHASES

ABSTRACT. This paper examines whether stock repurchases have information content beyond earnings and book value of the firm. Ohlson Model (1995) is used to test the association between stock repurchases and the market value of the firm. Financial data pertaining to S&P500 from Compustat database are used in the analyses for the years 2003–2008. The results of this study report that stock repurchases have significant positive relationship with the market value of the firm. This study contributes to the literature by providing evidence that is consistent with stock repurchases positive association with firm’s market value. pp. 11–18
JEL Codes: E22, G14, L11, L22

Keywords: information content, stock repurchases, book value, firm’s market value