Abstract
This paper develops a model in which managers can signal their firms' true values by using either a dividend or a stock repurchase or both. The authors explain a number of stylized facts about these cash‐disbursement mechanisms, particularly those concerning the relative magnitudes of stock price responses to dividends and repurchases. Most importantly, they explain why a stock repurchase elicits a significantly higher price response, on average, than a dividend announcement. 1987 The American Finance Association
Original language | English |
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Pages (from-to) | 365-394 |
Number of pages | 30 |
Journal | Journal of Finance |
Volume | 42 |
Issue number | 2 |
DOIs | |
State | Published - Jun 1987 |