Managerial Timing and Corporate Liquidity : Evidence from Actual Share Repurchases

  title={Managerial Timing and Corporate Liquidity : Evidence from Actual Share Repurchases},
  author={Paul Brockman and Dennis Y. Chung},
We investigate the timing of open market share repurchases and the resultant impact on firm liquidity. Using Hong Kong’s unique disclosure environment, we identify the exact implementation dates for over 5,000 equity buybacks. We find that managers exhibit substantial timing ability. Consistent with the information-asymmetry hypothesis, bid-ask spreads widen and depths narrow during repurchase periods. We decompose bid-ask spreads and show that adverse selection costs increase substantially as… CONTINUE READING

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