Open market share repurchases and the free cash flow hypothesis G35

Open market share repurchases and the free cash flow hypothesis G35

We investigate the source of shareholder gains when open market share repurchases are announced. We find evidence that abnormal stock market returns are related to the reduction of free cash flow agency costs, which supports Jensen's free cash flow hypothesis.

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Bibliographische Detailangaben
Veröffentlicht in:Economics letters 1995-06, Vol.48 (3), p.405-410
Hauptverfasser: Vafeas, Nikos, Maurice Joy, O.
Format: Artikel
Sprache:eng
Schlagworte:
Cash flow
Market share
Stock returns
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Beschreibung
Zusammenfassung:We investigate the source of shareholder gains when open market share repurchases are announced. We find evidence that abnormal stock market returns are related to the reduction of free cash flow agency costs, which supports Jensen's free cash flow hypothesis.
ISSN:0165-1765
1873-7374
DOI:10.1016/0165-1765(94)00631-B