Outside the U.S. short-term and long-term excess returns around share repurchase
announcements are positive. Long-term (as well as short-term) abnormal returns are
positively related to an undervaluation index (Peyer and Vermaelen, 2009, RFS) which
suggests that managers are able to time the market when markets overreact to bad news.
While short-term and long-term excess returns are positively related to country governance quality, company-specific measures of governance quality tell a different story. While we find some evidence that firm-level governance quality is positively related to short-term and long-run excess returns outside the U.S., this relation vanishes among U.S. buybacks. This is consistent with the hypothesis that U.S. abnormal returns are at least partially driven by a reduction in agency costs of free cash flow. Finally, in countries where buybacks have to be approved by shareholders, short-term and long-term excess returns are smaller. However these also tend to be the countries with lower governance quality.
Using hand-collected data on 691 corporate inversions from 11 home countries into 45 host destinations in 1996-2013, we document that corporations invert to destinations with lower tax rates and similar governance standards. Indeed, passage of...Read more
This paper, which forms part of the first phase of the New Special Study of the Securities Markets Project, explores how globalization has affected the operation of securities markets and the challenges this poses for their regulation. In Part I...Read more
For the last decade economists have been preoccupied with the decline in bank financing to small businesses and entrepreneurs. This effort has produced a better understanding of the obstacles to external financing. We examine the market and ...Read more
‘Crowdfunding’ — raising capital through large numbers of small contributions — is a burgeoning phenomenon, spurred by the internet’s capacity to reduce communication costs. Its still-evolving status is reflected in diversity of contracting...Read more