Voluntary disclosures regarding open market repurchase programs
Leonce Bargeron, Alice Bonaimé, William Docimo, Mei Feng, Shawn Thomas
Contemporary Accounting Research · 2024 · Volume 41 · Issue 2
Abstract
This paper studies voluntary disclosures that firms have suspended, resumed, or completed their open market repurchase programs. Voluntary disclosures of repurchase status updates are common and value-relevant. They also inform subsequent repurchase activities: voluntary disclosers are more likely to complete their repurchase programs and to initiate new repurchase programs than firms with undisclosed repurchase status changes. Moreover, firms that disclose repurchase suspensions experience larger returns to subsequent repurchase authorizations, consistent with a reward for establishing a reputation for transparency via voluntary bad news disclosure. Finally, exploiting a change in repurchase reporting requirements, we document that voluntary updates are less frequent when mandatory disclosure increases. An important exception, however, is when macroeconomic uncertainty is high, such as during the Great Recession and the COVID-19 pandemic.
Keywords
payout flexibility, payout policy, share repurchases, voluntary disclosure, communication d’information facultative, flexibilité de la distribution, politique de distribution, rachats d’actions
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