Graduation Year


Document Type




Degree Granting Department

Business Administration

Major Professor

Jianping Qi, Ph.D.

Committee Member

Ninon Sutton, Ph.D.

Committee Member

Christos Pantzalis, Ph.D.

Committee Member

Gary Patterson, Ph.D.


Agency, Executive Compensation, Stock Options, Acquisitions, Method of Payment


Researchers have consistently shown that a firms repurchase announcement is met with positive abnormal stock price return reactions. Open-market repurchases are extremely flexible, non-committal and non-punitive; thus, it is puzzling that the mere announcement of an open-market repurchase will likely increase a firms stock price. I propose to disentangle a firms choice to repurchase its stock to determine when a repurchase announcement is good news for shareholders and when the announcement is not.

I find that the purpose of the repurchase announcement matters. At the announcement date, managers intention of avoiding dilution is significantly negative and enhancing shareholder value is significantly positive, as expected. However, more interesting results are observed at two-years and three-years post announcement where I show that counteracting dilution is not a good reason to conduct a repurchase and, although not as strongly negative, enhancing shareholder value does not bear out its announcement promise. Furthermore, I find that firms that repurchase their shares to finance an acquisition are well compensated for their efforts, especially in the long run. I attribute their success to higher cash flows resulting from reducing their tax burden with their amortization deduction of the goodwill created from the purchase accounting acquisition.