Does prior record matter in the wealth effect of open-market share repurchase announcement?

1. Does prior record matter in the wealth effect of open-market share repurchase announcement? Shao-Chi Chang, Sheng-Syan Chen, and Li-Yu Chen 2006 NTU Conference

2. Summary • This study investigates whether prior experience of share repurchases matters in the market reaction to the subsequent repurchase announcement. The result shows that better record in the past strengthens the subsequent return and analyst forecast revision. • They provide strong evidence supporting the stock price manipulation in OMR process, which is important and interesting in the repurchase literature.

3. Comments- SR return • In table 3, announcement return of small quintile is positive. Does it mean that investors do not learn from the previous lessons? In contrast, the difference between small and large is significant, it seems that investors are able to distinguish these OMRs by previous records. So, do authors suggest a pooling or separate equilibrium initially?

4. Comments- LR return • This paper presents the regression for long run return only, but what the result will be if we look at the portfolio analysis (as table 3)? • If previous record does matter, the long run return of small is expected to be zero (even negative).

5. Comments- other measure of performance • In addition to analyst forecast revision, the authors may want to learn the operating performance, such as ROA, profit margin. It might be helpful to strengthen the results.