Economic Sources of Gain in Stock Repurchases Journal Article

Overview

abstract

• AbstractPrevious studies offer a mixed understanding of the economic role of stock repurchases. This paper investigates three key economic motivations—mispricing, disgorging free cash flow, and increasing leverage—by evaluating cross-sectional differences in both the initial market reaction and long-run performance. The initial reaction provides some support for the mispricing story. However, subsequent earnings-related information shocks suggest that the initial market reaction is incomplete and that long-run performance may be informative. The long-horizon return evidence is most consistent with the mispricing hypothesis and, to some degree, the free cash flow hypothesis. We find little support for the leverage hypothesis.

CU Boulder Authors

• Ikenberry, Dave

publication date

• September 1, 2004

Date in CU Experts

• January 16, 2026 3:44 AM

Full Author List

• Chan K; Ikenberry D; Lee I

author count

• 3

published in

• Journal of Financial and Quantitative Analysis  Journal

Other Profiles

International Standard Serial Number (ISSN)

• 0022-1090

Electronic International Standard Serial Number (EISSN)

• 1756-6916

Digital Object Identifier (DOI)

• https://doi.org/10.1017/s0022109000003987

Additional Document Info

start page

• 461

end page

• 479

volume

• 39

issue

• 3