earticle

영어

This study examined the information effect of open market stock repurchase program on stock price in Korean Stock Exchange. The sample period is from 1996 to 2000. The result confirms that the information effect exists and is positive in KSE like NYSE. The anomalous phenomenon is found that even after stock repurchase announcement, the abnormal returns still exist for the long time. This means that the repurcase announcement informs the market of the underpricing of current stock and the stock repurchase program is used as a tool to increase the stock price. Such being the case, the cause of information effect of stock repurchase was explored. Our study shows that the firms with the high level of cash flows, the high portion of large shreholders and the high target repurchase ratios have the higher repurchase effect but the ex-ante profit forecastes have no effect on the stock repurchase program. Finally this study finds that the repurchase program is used to control the underpriced stock price, and also the wealth of shareholders is enlarged by the productivity of shareholders through the repurchase program.