Market Reaction to Open Market Stock Repurchases and Industry Affiliation

This study conducts an inter-industry comparison of open market common stock repurchases to identify the role of industry affiliation in the magnitude of the shortand long-term returns to firms following the repurchase announcements. Results indicate that stock repurchasing firms enjoy significant positive excess returns during the five-day announcement window, with significant differences across industry groups. Stock repurchasing firms overall do not outperform their industry peers in the long run, however, though firms from different industries exhibit differential long-term performance subsequent to the repurchase announcements. Consequently, industry affiliation is important in the analysis of stock buybacks.