摘要： •Firms announcing OMRs to counter undervaluation reveal their weakness to bidders and put them on the radar screen of bidders.•After including the takeover risk factor into asset pricing tests, there are no abnormal returns in the post-OMR period.•The increase in takeover risk in the post-OMR period is larger for firms that attract more attentions of bidders. We hypothesize that announcing open market share repurchases (OMRs) to counter negative valuation shocks reveals repurchasing firms’ lost growth opportunities or underperforming assets to potential bidders, making them more likely to become takeover targets. This also leads their investors to face higher takeover risk, a systematic risk associated with economic fundamentals that drive takeover waves, as proposed by Cremers et al. (2009). Indeed, we find that repurchasing firms tend to face higher takeover probability in the first few years following their OMR announcements, and that the increase in takeover risk can largely explain their post-announcement long-run abnormal returns documented in the literature. The increase in takeover risk is larger for smaller firms, firms with poorer pre-announcement stock performance, and those attracting more attention of market participants. Our results suggest that OMRs, which are used by many firms to counter undervaluation, could make the firms more sensitive to takeover waves and raise their cost of equity capital. 出版者： Amsterdam: Elsevier B.V 出版日期： 2014-05-01 出處： Journal of banking & finance, 2014-05, Vol.42, p.283-301 資源來源： Elsevier ScienceDirect Journals Complete 版權： 2014 Elsevier B.V. 版權： Copyright Elsevier Sequoia S.A. May 2014 識別號： ISSN: 0378-4266 識別號： EISSN: 1872-6372 識別號： DOI: 10.1016/j.jbankfin.2014.02.004 識別號： CODEN: JBFIDO
