Investment Behavior and Risk Dynamics : Evidence from Share Repurchases

We explore the distinguishing characteristics of firms that completed or stopped their repurchase programs. Our findings help further understanding the economic reasons why firms would stop buybacks. Based on our international sample of 818 completed and 101 stopped share repurchase programs shows a significant drop in systematic risk around completed buybacks. This suggests that completed buybacks are a response to deteriorating investment opportunities. In contrast, the systematic risk of incomplete-repurchasing firms decreases prior to the announcement, followed by an increase that peaks during the event period. This suggests that firms stop their repurchase intentions when growth options move into the money