Title

The value of open market repurchases of closed-end fund shares

Authors

Authors

G. E. Porter; R. L. Roenfeldt;N. W. Sicherman

Comments

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Abbreviated Journal Title

J. Bus.

Keywords

CORPORATE PAYOUT POLICY; STOCK REPURCHASES; LINEAR-REGRESSION; DIVIDENDS; LIQUIDITY; PROGRAMS; RETURNS; Business

Abstract

We illustrate the value to shareholders when closed-end funds repurchase shares at a discount from net asset value. Repurchases increase share price even when there is no asymmetric information concerning the value of the underlying assets and the percentage discount remains unchanged following the repurchase. Expected gains to shareholders are derived from capturing the discount on the assets associated with the shares repurchased. In an analysis of 27 open market repurchase announcements by closed-end funds, the regression coefficient estimate that measures the association between the actual excess return and the expected increase in share price is essentially 1.0.

Journal Title

Journal of Business

Volume

72

Issue/Number

2

Publication Date

1-1-1999

Document Type

Article

Language

English

First Page

257

Last Page

276

WOS Identifier

WOS:000079432500005

ISSN

0021-9398

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