Theo vermaelen is a professor of finance at insead and the. Coerc as a new financing instrument for corporations. Some argue that tax competition is beneficial by forcing governments to impose efficient tax prices on. Pdf this text provides an overview of research on stock repurchases. Pdf the nature and persistence of buyback anomalies semantic. Evgeniou, theodoros and vermaelen, theo, share buybacks and gender diversity june 27. Share repurchases foundations and trendsr in finance. Market efficiency, longterm returns, and behavioral. Share repurchases foundations and trends r in finance. Richardson pettit, yulong ma, and jia he, do corporate managers. Free cash flow 71 74 78 82 86 90 94 discount rate 10% pvexplicit forecast period 345 pvcv 966. Mba courses textbooks for p1 and p3 januaryfebruary 2018 p1 business foundations courses finance module lucie tepla corporate finance by jonathan b. Nov 24, 2014 is refusing to fight climate change unethical. Theo vermaelen is schroders chaired professor of finance at insead.
Some argue that tax competition is beneficial by forcing governments to impose efficient tax prices on residents for the provision of public services. Google scholar vermaelen, theo 1981 common stock repurchases and market signalling, journal of financial economics. B47 2017 applied quantitative methods for management, economics and finance david drake. Market efficiency, longterm returns, and behavioral finance. For example, the repurchase may present an impediment for a potential. Mba courses textbooks for p1 and p3 januaryfebruary 2018 p1 business foundations courses. Everyday low prices and free delivery on eligible orders. Applied corporate finance joel peress and theo vermaelen analysis for financial management by robert c. But because gender diversity improves the quality of public information disclosure repurchases are less driven by market timing. Journal of financial economics vol 49, issue 2, pages.
Dividends are the traditional mode of providing a stream of income to shareholders who, as the name says. Subscribe to this free journal for more curated articles on this topic. Buybacks around the world alberto manconi urs peyer theo vermaelen 12022012 abstract this paper documents that shortterm returns around share repurchase announcements and longrun abnormal returns afterwards are following the same pattern in non. Thakor, a theory of stock price responses to alternative corporate cash disbursement methods. Free cash flow 71 74 78 82 86 90 94 discount rate 10% pvexplicit forecast period 345 pvcv 966 present value as of beginning 2008 1,311. Peyer insead and theo vermaelen insead august 2004 abstract we investigate the causes and consequences of 737 privately negotiated share repurchases in the years 19842001. The many facets of privately negotiated stock repurchases. All content in this area was uploaded by theo vermaelen. In recent years openmarket share repurchase programs have become an important payout policy not only for u. There are free market and government based solutions.
If the deal goes through 10% of the combined work force will be fired and will stay unemployed for at least a year. Buybacks around the world market timing, governance and regulation alberto manconi urs peyer theo vermaelen september 2015 abstract we document the consequences of open market share repurchases in a global setting, using over 20,000 announcements from 32 countries. Alberto manconi, urs peyer and theo vermaelen 2014. The most downloaded articles from journal of financial economics in the last 90 days. Insead professor theo vermaelen on maximising shareholder value. Pdf the nature and persistence of buyback anomalies. He teaches in the mba, phd and executive education programmes and is an academic director of the advanced international corporate finance programme. George pennacchi,1 theo vermaelen,2 and christian c. Shareholder value is defined as the present value of free cash flows from now until infinity, discounted.
Using a sample free of survivor bias, the author demonstrates that common factors in stock returns and investment expenses almost. Sep 02, 20 buybacks around the world alberto manconi urs peyer theo vermaelen 2 september 20 abstract this paper documents that outside the u. Insead professor theo vermaelen on maximising shareholder. Issued as a bond, it converts to new shareholders equity if a banks market value of capital falls below a prespecified trigger. The most common explanation for the shortterm abnormal returns is that the repurchase announcement is a positive information signal or that it reflects the benefits from a reduction in agency costs of free. Dec 01, 2005 buy share repurchases foundations and trends r in finance by vermaelen, theo isbn.
This free service is available to anyone who has published and whose publication is in scopus. Buybacks around the world alberto manconi urs peyer theo vermaelen 2 september 20 abstract this paper documents that outside the u. Finance and accounting department working paper series n23312. Vast literature has examined the effect of share repurchase announcement on developed countries, especially the u. The coerc avoids the problems with market based triggers such as death spirals as a result of manipulation or. Theodoros and vermaelen, theo, share buybacks and gender diversity june 27, 2017. Also thanks to cfo focus group participants who helped us refine and clarify the survey instrument. From retainand reinvest to downsizeanddistribute since the late 1980s, in the name of maximizing shareholder value msv, u. Free university of berlin, humboldt university of berlin. Being leftfooted, he usually plays as a leftsided centreback and can play at leftback as well. This paper reports anomalous price behavior around repurchase tender offers. The value of share buybacks in general, markets have applauded such moves, making buybacks an alluring substitute if improvements in operational performance are elusive. Wolff this paper introduces, analyzes, and values a new form of contingent convertible coco, a call option enhanced reverse convertible coerc.
There are free market and government based solutions to addressing that risk, but one political ideology or the other doesnt change the existence of. Theo vermaelen s presentation for our financial innovation. Share repurchases foundations and trendsr in finance vermaelen, theo on. Buybacks around the world alberto manconi urs peyer theo vermaelen 12022012 abstract this paper documents that shortterm returns around share repurchase announcements and longrun abnormal returns afterwards are following the same pattern in nonus firms as document by prior literature for u. Journal of financial economics vol 49, issue 2, pages 9. The author presents a personal interpretation of the numerous research results published during the last 25 years starting with a description of the various methods to repurchase stock and the growing importance of buybacks around the world.
Lakonishok and vermaelen 1990 find that on average, prices remain at. Debtfinanced repurchases and credit ratings with the respect of free cash. We conduct a controlled laboratory experiment in the spirit of merton, in which subjects dynamically choose their portfolio allocation between a risk free and risky asset. Shareholder value maximization misunderstood cbs news. Anomalous price behavior around by josef lakonishok n 88 40. Theo vermaelen is a professor of finance, the ubs chair in investment banking, endowed in honour of henry grunfeld, and and the chair of the finance area. Being leftfooted, he usually plays as a leftsided centreback and can play at. Pdf using recent data, we reject the hypothesis that the buyback anomalies first reported by lakonishok and vermaelen. Theo vermaelen 2005, share repurchases, foundations and trends in finance. Northholland publishing company common stock repurchases and market signalling an empirical study theo vermaelen university of british columbia, vancouver, bc, canada v6t 1 w5 received january 1980, final version received january 1981 this paper examines the pricing behavior of securities of firms which repurchase their own shares. Most downloaded journal of financial economics articles. The ones marked may be different from the article in the profile. I sincerely appreciate the comments and suggestions of leonce bargeron, brad jordan, jason karceski, min maung, greg nagel, jacob oded, shawn thomas, theo vermaelen, and seminar participants at the university of kentucky, the financial management association meetings, and the southern finance association meetings. The case for coercs, lsf research working paper series 1008, luxembourg school of finance, university of luxembourg.
Share buybacks and gender diversity by theodoros evgeniou. Death spiral convertibles by pierre hillion insead and theo vermaelen1 insead may 2001 death spiral convertibles are privately held convertible securities preferred stock or debentures with a conversion price that is set at a discount from the average or sometimes the minimum of past stock prices in a lookback period. Buying shares before the expiration date of a repurchase tender offer and tendering to the firm produces, on average, abnormal returns of more than 9 percent over a period shorter than one week. Tax competition and coordination is one of the most pressing issues for tax authorities in modern economies, but it is a highly controversial subject. Dec 01, 2005 share repurchases foundations and trendsr in finance vermaelen, theo on.
Anomalous price behavior around repurchase tender offers. Jones graduate school of business administration, rice university, houston, tx 77005, usa. Buy share repurchases foundations and trends r in finance by vermaelen, theo isbn. Using the optimal allocation of an investor with hyperbolic absolute risk aversion hara utility, we fit the experimental choices to characterize the risk profile of our. Common stock repurchases and market signalling an empirical study theo vermaelen ljniversity of british columbia, vancouver, bc, canada v6t 2 w5 received january 1980, final version received january 1981 this paper examines the pricing behavior of securities of firms which repurchase their own shares. Theo vermaelen is a professor of finance, the ubs chair in investment banking, endowed in honour of henry grunfeld, and and the chair of the finance area at insead. Shareholder value is defined as the present value of free. This paper was completed when the second author was visiting associate professor at. Market underreaction to open market share repurchases david ikenberry, josef lakonishoktb, theo vermaelencqd jesse h. Anomalous price behavior around repurchase tender offers by josef lakonishok and theo vermaelen preliminary revised, august 1988 we are indebted to the participants of the finance workshop at insead and to pierre hillion and pieter bossaert for helpful comments. The many facets of privately negotiated stock repurchases urs c. Theo vermaelens presentation for our financial innovation. Yet while the increases in earnings per share that many buybacks deliver help managers hit epsbased compensation targets, boosting eps in this way doesnt signify an. Kothari, owen lamont, mark mitchell, hersh shefrin, robert shiller, rex sinquefield, richard thaler, theo vermaelen, robert vishny, ivo welch, and a referee have been helpful.
New evidence on the agency costs of free cash flow, 49 j. Since the late 1980s, in the name of maximizing shareholder value msv, u. Market underreaction to open market share repurchases. Six different players vermaelen, van persie, arshavin, fabregas, theo walcott and nicklas bendtner scored in the teams 62 win. Peterson, jim poterba, hersh shefri n, david robinson, frank ryan, theo vermaelen, ivo welch, and luigi zingales.
This paper introduces, analyzes, and values a new form of contingent. Kothari, owen lamont, mark mitchell, hersh shefrin, robert shiller, rex sinquefield, richard thaler, theo vermaelen, robert vishny, ivo. This paper introduces, analyzes, and values a new form of contingent convertible coco, a call option enhanced reverse convertible coerc. Read market efficiency, longterm returns, and behavioral finance 1 the comments of brad barber, david hirshleifer, s. Anomalous price behavior around repurchase tender offers 457 one explanation for this behavior is that there might be offsetting benefits for the management team to compensate for the expropriation of their personal holdings.
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