Corporate Governance and Earnings Management Before Share Repurchase Announcements in Singapore

Share repurchase in Singapore was legalized in 1998. It is well known that investors view share repurchase as good news. This study is based on share repurchase announcements from 2006 to 2009. The mean Cumulative Market-Adjusted Returns (CAR) for the period [0, +1] and [-1, +1] are significant at 1...

Full description

Saved in:
Bibliographic Details
Main Author: CHUA, Jian Ming
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2010
Subjects:
Online Access:https://ink.library.smu.edu.sg/etd_coll/60
https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1059&context=etd_coll
Tags: Add Tag
No Tags, Be the first to tag this record!
Institution: Singapore Management University
Language: English
Description
Summary:Share repurchase in Singapore was legalized in 1998. It is well known that investors view share repurchase as good news. This study is based on share repurchase announcements from 2006 to 2009. The mean Cumulative Market-Adjusted Returns (CAR) for the period [0, +1] and [-1, +1] are significant at 1.25% and 1.33% respectively. In Singapore, there are positive abnormal returns following share repurchase announcements in support of the ―free cash flow‖ hypothesis. By using the Singapore Corporate Governance Index as a proxy, the weakly governed companies exhibit the strongest, positive and significant CAR of 2.62% for the period [0, +1]. Lastly, one year prior to share repurchase announcements; companies on average manage their discretionary current accrual downwards by 1.44%. The companies with the best corporate governance manage their earnings downwards by 2.69%. In a regression, the CAR for the period [0, +1] changes by 0.1097% when the discretionary current accrual changes by 1%.