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Insider Holdings and Open-Market Share Repurchases in Corporate America

By Henry Stevens

Abstract

This research investigates what effect insider ownership has on U.S. firms’ decisions to repurchase shares, as well as on the behavior of those firms’ stock prices following such a decision. I use firm level quarterly panel data stretching from 2011 to 2015, which will include 93 firms from the S&P 100 stock market index to test for the effect that insider holdings has on the decision to announce a buyback, and the outcomes of those announcements. The sample is comprised of firms with relatively large market capitalizations. Using a logistic model to answer the first question and an OLS to answer the second, I do not find evidence that supports insider holdings as a predictor of announcement decisions or returns following an announcement among the firms in our sample. I do not find that many of the other relevant factors cited in the literature prove explanatory either. My results suggest that the nature of the firms in our sample (large and under intense scrutiny) may dispel some of the effects of insider holdings, as well as those of the other relevant factors

Year: 2016
OAI identifier: oai:triceratops.brynmawr.edu:10066/18440
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