The Effects of Ownership and Stock Liquidity on the Timing of Repurchase Transactions

We construct a novel dataset of detailed monthly data on U.S. open market stock repurchases (OMRs) that became available following stricter SEC disclosure requirements in 2004. The data allow us to investigate the timing of OMRs. We find evidence that OMRs are timed to benefit non-selling shareholders. Our analysis identifies ownership and liquidity as significant determinants of timing gains: stock liquidity increases and institutional ownership decreases timing gains, while the relation between timing and insider ownership is inverse U-shaped. These findings suggest the need for more timely and detailed OMR disclosure particularly for relatively liquid stocks with low institutional ownership and intermediate levels of inside ownership