| dc.description.abstract | This study contains two essays about open market repurchases (OMR) in Taiwan.
Essay 1 examines several important issues about the open market repurchases in Taiwan, which are motives and firm characteristics of OMR firms, market performance and the determinants of completion rates and multiple announcements. The results can be summarized as follows. First, OMR firms are more likely to be undervalued, much larger, have more cash flow, significantly lower insider holdings and higher the pledged ratio of insider holdings. Second, undervaluation is the most popular reason why the firms announce OMR programs. Third, OMR firms’ managers have incentive to trade strategically. They buy more shares when prices fall and less shares when prices rise. Finally, undervaluation is more likely to be a motive for firms which announce OMR programs frequently, these firms tend to have higher and more stable cash flows, and higher completion rates. The result suggests that firms with multiple repurchase programs view OMR programs as a constant policy.
Essay 2 investigates whether open market repurchase announcement is a credible signal. In this essay, assumes that price ranges that the OMR firm announces conveys signals about the firm’s prospects and programs the OMR firm implements actually conveys signals about the firm intends. Samples are divided into four groups, and assumed OMR programs announcements by firms with “higher price range and lower completion rate” are credible; “higher price range and higher completion rate” are incredible. Empirical results show credible OMR firms’ announcements are greeted with a stronger positive reaction by the market. Further analyses indicate the credible OMR firms are the much more likely to transfer shares to employees than incredible OMR firms. | en_US |