Journal article
Stock repurchases as an earnings management device
Journal of accounting & economics, Vol.41(1), pp.3-27
04/01/2006
DOI: 10.1016/j.jacceco.2005.10.002
Abstract
We investigate whether firms use stock repurchases to meet or beat analysts’ earnings per share (EPS) forecasts. We identify conditions under which repurchases increase EPS and document the frequency of accretive repurchases from 1988 to 2001. We find a disproportionately large number of accretive stock repurchases among firms that would have missed analysts’ forecasts without the repurchase. The repurchase-induced component of earnings surprises appears to be discounted by the market, and this discount is larger when the repurchase seems motivated by EPS management, although using the repurchase to avoid missing analyst forecasts appears to mitigate some of the negative stock price response.
Details
- Title: Subtitle
- Stock repurchases as an earnings management device
- Creators
- Paul Hribar - Cornell UniversityNicole Thorne Jenkins - Washington University in St. LouisW. Bruce Johnson - University of Iowa
- Resource Type
- Journal article
- Publication Details
- Journal of accounting & economics, Vol.41(1), pp.3-27
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.jacceco.2005.10.002
- ISSN
- 0165-4101
- eISSN
- 1879-1980
- Language
- English
- Date published
- 04/01/2006
- Academic Unit
- Accounting
- Record Identifier
- 9984380496402771
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