Information Signalling and Abnormal Returns: Analysis of Finnish Open Market Repurchases

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School of Business | Bachelor's thesis
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Date

2025

Department

Rahoituksen laitos

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Mcode

Degree programme

Rahoitus

Language

en

Pages

22+1

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Abstract

This thesis examines the stock performance of Finnish firms following open market share repurchase initiations from 2006 to 2021, using signalling theory as the primary interpretive framework. I find that repurchasing firms earn an average short-term abnormal return of approximately 1.2% over a five-day window around the initiation. Over the following two years, they outperform by a compounded abnormal return of around 5%, depending on the used benchmark. Contrary to expectations, this outperformance disappears by years three and four. This pattern suggests that the information conveyed by repurchase initiations is not immediately reflected in prices, but instead incorporated gradually as investors gain confidence in the signal.

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Thesis advisor

Korhonen, Anniina

Keywords

share repurchases, signalling theory, abnormal returns, buybacks

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https://urn.fi/URN:NBN:fi:aalto-202505183742

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[kand] Kauppakorkeakoulu / BIZ