The Effects of Stock Repurchases on Rival Firms

  • Author(s): MICHAEL G. HERTZEL
  • Published: Apr 30, 2012
  • Pages: 707-716
  • DOI: 10.1111/j.1540-6261.1991.tb02681.x


This paper investigates the stock price behavior of rival firms in the same industry as firms announcing stock repurchase tender offers. Using a sample of 134 repurchase announcements, I find that rival firms on average realize insignificant announcement period abnormal returns. Negative rival stock price performance is detected over longer intervals surrounding the announcement period and for a subset of announcements which ex ante were identified as most likely to affect rivals. This evidence, however, is statistically weak and does little to alter the overall conclusion that the information in repurchase announcements is primarily firm‐specific.

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