Share repurchases have also become an important global activity in recent years, as opposed to a minor activity only relevant in US markets. In the late 70’s, one had to look back for 15 years to collect a few hundred repurchase announcements. Today, one would only have to look back a few months. Share repurchases were largely nonexistent outside the US. Today, non-US buyback activity has become as important as in the US.

The purpose of this article is to provide an overview of research on stock repurchases. Share Repurchases starts with a description of the various methods to repurchase stock: fixed price tender offers, Dutch auction tender offers, open market repurchases, private repurchases and synthetic buybacks. The next section documents the growing importance of repurchase activity around the world and relates it to changes in the institutional environment, i.e. regulation and taxes. The author provides an overview of short-term event-studies around repurchase announcements. The general conclusion is that, regardless of the repurchase method, stock prices increase significantly. The next section discusses to what extent various theories can explain this price increase. The author then shows that managers are right when they say they are able to time the market by buying back stock when their shares are undervalued. Section seven compares dividends and repurchases. Finally, the author summarizes the main findings and implications for corporate financial policy.

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Contents:

• Introduction
• Repurchase Methods
• Share Repurchase: Regulatory, Tax and Other Drivers
• The Economic Consequences of Share Repurchases: The Short Run
• Why Do Stock Prices Increase Around Buyback Announcements?
• When Do Company Repurchase Shares? Evidence on Long-run Performances After Repurchase Announcements
• Dividends Versus Share Repurchase
• References