Implications of Possible Information Asymmetries in Buybacks
Seminar by Theodoros Evgeniou (INSEAD)
On Tuesday, March 14, 2017 at 12:00pm (1701 - N1)
Share buybacks are corporate events that may be driven by the market timing ability of company insiders supported by potential information advantage. As such, they can also provide a unique experimental setting to answer different types of research questions. In this talk I will first discuss evidence that previously reported post buyback authorisation announcement abnormal returns are consistent with the market timing hypothesis: the option to take advantage of undervalued stock is more valuable when firm value is more uncertain or is more driven by company-specific information. Based on this information advantage hypothesis, I will then discuss how buybacks can be used to answer questions about board gender diversity. For example, do women have less information e.g., because they are not part of the (larger) male information network? Are women more risk averse than men? Are men more overconfident than women? We examine these questions by testing whether board composition, in particular the presence or percentage of women on the board (hereafter also called ''diversity''), influences the likelihood that a firm announces a buyback, as well as the consequences of the buyback for shareholder value.
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