The impact of asset repurchases and issues in an experimental market
Haruvy,E. Noussair,C.N. Powell,O.R.
Haruvy,E.
Noussair,C.N.
Powell,O.R.
Abstract
We create an experimental asset market in which the value of the shares is independent of the quantity outstanding, and find that (i) repurchases increase, whereas share issues decrease, the price of the asset. These effects are consistent with downward-sloping demand for the asset. (ii) This behavior is consistent with three trader types—fundamental, speculator, and momentum—interacting in the market. (iii) Share issues drive prices down toward, but not beyond, fundamental values. This downward resistance at the fundamental value is predicted by the impact of an intervention on the proportion of units and cash held by each trader type.
Description
Date
2014-04
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
Organizational Units
Journal Issue
Keywords
D22 - Firm Behavior: Empirical Analysis, D44 - Auctions, D46 - Value Theory
Citation
Haruvy, E, Noussair, C N & Powell, O R 2014, 'The impact of asset repurchases and issues in an experimental market', Review of Finance, vol. 18, no. 2, pp. 681-713. https://doi.org/10.1093/rof/rft007
License
info:eu-repo/semantics/restrictedAccess