earticle

영어

From 1994, it is not unusual for firms to buy back their own shares. In Korea, firms mainly purchase their outstanding stock to thwart takeover attempts and to stabilize the stock price. Firms planning to purchase their outstanding stock should disclose the sort of stock, purpose, amount, and time related to the purchase. This study empirically examines information contents of disclosing the treasury stock purchase. The sample consists of 325 listed firms disclosing the treasury stock purchase over the period of 1994 to 1996. To test the information contents of disclosure, the average rate of returns of 325 firms is compared with that of the Composite Stock Price Index. The comparison is also conducted to estimate the adequacy of disclosure items related to the purchase that are required by the rules. The results show that the average rate of returns of 325 firms is greater than that of the Composite Stock Price Index at 1% significance level. This indicates that the disclosure of treasury stock purchase includes information contents. Also, the results show that the average rate of returns of common stock is greater than that of the preferred stock, and that the higher the ratio of purchase quantity to total outstanding stock, the greater the average rate of returns, and that the average rate of returns of purchase purpose for stabilizing the stock price is greater than that of any other purpose. This indicates that the disclosure items required by the rules is adequate. As the case of any study, this study has several limitations. But the results of this study will be support for further studies.