Corporate Repurchase Decisions Following Mutual Fund Sales

摘要

This paper examines managerial response to widespread selling by mutual funds. We study the effect on share repurchases of liquidity-basedprice pressure measured by mutual fund transactions caused by capital outflows. Firms whose shares undergo widespread selling by funds experiencing large outflows are more likely to repurchase their own shares, controlling for the effect of returns on share repurchases. The empirical results suggest that firms act as buyers of last resort and provide price support for their own shares.