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dc.contributor.authorFried, Jesse M.
dc.date.accessioned2014-04-11T02:12:40Z
dc.date.issued2005
dc.identifier.citationJesse M. Fried, Informed Trading and False Signaling with Open Market Repurchases, 93 Calif. L. Rev. 1326 (2005).en_US
dc.identifier.issn0008-1221en_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:12063380
dc.description.abstractPublic companies in the United States and elsewhere increasingly use open market stock buybacks, rather than dividends, to distribute cash to shareholders. Academic commentators have emphasized the possible benefits of such repurchases for shareholders. However, little attention has been paid to their potential drawbacks. This Article shows that managers use open market repurchases to indirectly buy stock for themselves at a bargain price. Managers also boost stock prices by announcing repurchase programs they do not intend to execute, enabling them to unload their own shares at a higher price. Such bargain repurchases and inflated-price sales systematically transfer significant amounts of value from public investors to managers, as well as distort managers' payout decisions. The Article concludes by proposing a new approach to regulating open market repurchases: requiring firms to disclose specific details of their buy orders in advance. This pre-repurchase disclosure rule, the Article shows, would undermine managers' ability to use repurchases for informed trading and false signaling, thereby reducing the resulting distortions and costs to shareholders. Moreoever, it would achieve these objectives without eroding any of the potential benefits of repurchases.en_US
dc.language.isoen_USen_US
dc.publisherCalifornia Law Review Inc.en_US
dc.relation.hasversionhttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=564682en_US
dc.relation.hasversionhttp://www.law.berkeley.edu/faculty/friedj/informed_trading_false_signal.pdfen_US
dash.licenseLAA
dc.subjectPayout policy, stock repurchases, dividends, signaling, insider tradingen_US
dc.titleInformed Trading and False Signaling with Open Market Repurchasesen_US
dc.typeJournal Articleen_US
dc.description.versionAuthor's Originalen_US
dc.relation.journalCalifornia Law Reviewen_US
dash.depositing.authorFried, Jesse M.
dc.date.available2014-04-11T02:12:40Z
dash.contributor.affiliatedFried, Jesse


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