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

    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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