Share Repurchase and Stock Price

  • Harold BiermanJr.


What happens to a firm’s stock price when the firm repurchases its shares? Initially, we will assume:
  1. a

    the market price is equal to the stock’s intrinsic value

  2. b

    there are no psychological reactions by the stock market or signaling effects

  3. c

    the market has anticipated the effects on stock value of a share repurchase program if such a program is to be implemented.



Market Price Stock Price Capital Gain Common Stock Share Repurchase 
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  1. Ikenbury, D., J. Lakonishok, and T. Vermaelen, “Market Underreacting to Open Market Share Repurchases,” Journal of Financial Economics, V39, N2–3 (October, 199) pp 181–208.Google Scholar

Copyright information

© Springer Science+Business Media New York 2001

Authors and Affiliations

  • Harold BiermanJr.
    • 1
  1. 1.The Johnson Graduate School of ManagementCornell UniversityIthacaUSA

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