What Drives the Declining Wealth Effect of Subsequent Share Repurchase Announcements?

Recent academic studies document that open market share repurchase announcement period returns are much lower than those reported in early studies. This study finds that the lower announcement returns are attributed to repeat announcements that dominate the sample in the recent period. The announcement period return of the initial repurchase program launched by a repeat repurchasing firm on average is positive. However, the more this firm repeats its repurchase announcement, the lower its announcement period abnormal returns. Further tests reveal that firms with negative past repurchase announcement returns are more likely to repeat their repurchase programs, which result in lower announcement returns. Our results are consistent with overconfident managers drive the lower repurchase announcement returns