Stock Repurchase as an Alternative to Dividend Payout: Evidence from the Warsaw Stock Exchange
نویسنده
چکیده
The paper investigates market reaction to announcements of stock repurchases and dividends and determinants of choice between the two payout methods. The analysis uses data on Polish firms with the sample period encompassing a significant tax regulation change. The average announcement period abnormal returns are relatively high and exceed 6% for stock repurchases and 2% for dividend initiations. The excess returns seem to be driven solely by the amount of cash distribution regardless of the method used. In particular, the tax issues do not prove to have an impact on the market reaction. Firms with higher operating, sustainable cash flows pay out dividends and use stock repurchases to signal information. JEL Classification: G14; G35
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