Institutional investment horizons and open-market stock repurchases: evidence from the Taiwan stock market

摘要

This article investigates how the investment horizon of a firm's institutional shareholders affects the outcome of stock repurchase. Our results show that repurchasing firms with long-term institutional investors experience significantly positive abnormal returns around the repurchasing announcements, actually buy back more shares during the execution period, and perform better over a subsequent 3-year period than repurchasing firms with short-term institutional investors. These findings suggest that repurchasing firms held by long-term institutional investors can acquire certification- and monitoring-related benefits, thus providing more credible signals about the true value of firms.