• norsk
    • English
  • English 
    • norsk
    • English
  • Login
View Item 
  •   Home
  • Handelshøyskolen BI
  • Student papers
  • Master of Science
  • View Item
  •   Home
  • Handelshøyskolen BI
  • Student papers
  • Master of Science
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

The buyback anomaly and the motives behind share repurchase announcements in Norway

Hagen, Oda Brudevoll; Bergersen, Emma Aashaug
Master thesis
Thumbnail
View/Open
2939382 (1).pdf (4.205Mb)
URI
https://hdl.handle.net/11250/2826220
Date
2021
Metadata
Show full item record
Collections
  • Master of Science [1116]
Abstract
Firms announcing a repurchase of their shares often experience a period of

abnormal returns; this is known as the buyback anomaly. The buyback anomaly is

a persistent market anomaly that is challenging to explain (Andreou et al., 2018).

Researchers like Ikenberry et al. (1995) and Peyer and Vermaelen (2009) found

positive long-run abnormal returns for firms in the 48 months following share

repurchase announcements.

This thesis is twofold. First, we investigate if Norwegian firms listed on Oslo

Stock Exchange (OSE) from 2000-2019 experience abnormal returns following a

share repurchase announcement. We employ a cross-sectional regression model

using the three-factor model by Fama and French (1993) with the additional

momentum factor (Carhart, 1997). We found long-term abnormal returns in the

four years following the repurchase announcements. Our results suggest that

Norwegian firms use share repurchase announcements to signal undervaluation to

the market, and that the market is underreacting to the undervaluation signal. The

underreaction might be rational, as several researchers claim that a repurchase

announcement is a weak signal as it does not impose any cost for the firm.

Second, we investigate what motivates these firms to announce share repurchases.

To examine the motives behind announcing share repurchases, we test the capital

structure adjustment hypothesis, the substitution of cash dividends hypothesis, the

excess cash distribution hypothesis and the signalling hypothesis. Our empirical

findings suggest that Norwegian firms announce share repurchases to signal the

market, to distribute excess cash, or to substitute cash dividends. However, it is

important to note that to substitute cash dividends or to distribute excess cash, the

firm would have to execute the repurchase after the announcement.
Description
Masteroppgave(MSc) in Master of Science in Business, Accounting and Business Control - Handelshøyskolen BI, 2021
Publisher
Handelshøyskolen BI

Contact Us | Send Feedback

Privacy policy
DSpace software copyright © 2002-2019  DuraSpace

Service from  Unit
 

 

Browse

ArchiveCommunities & CollectionsBy Issue DateAuthorsTitlesSubjectsDocument TypesJournalsThis CollectionBy Issue DateAuthorsTitlesSubjectsDocument TypesJournals

My Account

Login

Statistics

View Usage Statistics

Contact Us | Send Feedback

Privacy policy
DSpace software copyright © 2002-2019  DuraSpace

Service from  Unit