Operating performance and long-run stock returns following share repurchase: Evidence from an emerging market

This study examines the long-term abnormal returns and operating performance following share repurchase announcements by Vietnamese listed firms. Applying matched control samples based on industry, exchange listing, size plus book-to-market, and pre-event operating performance, we document significantly higher post-repurchase buy-and-hold abnormal returns over the one-year window. The outperformance becomes insignificant for most control samples with a longer horizon of 2 years after controlling for common pricing factors. Regarding operating performance, our results show improvement for repurchasing firms in the fiscal year concurrent with the repurchase announcements when we adopt the control sample based on pre-event performance, but we do not find significant differences for the subsequent fiscal year. Examining the relation between the dual phenomena, we find some evidence of positive association in that firms with better post-repurchase performance tend to have higher post-event abnormal returns. This relation is stronger for firms with higher completion rates, consistent with the notion that actual repurchase is a stronger and more credible signal to the market.