The Effect of Amount and Timing of Stock Repurchase on EPS Management

• Main Authors: Yao-Cong Tsai, 蔡燿聰
• Other Authors: Hong-Shu Fan
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/95817354857331566969

碩士 === 輔仁大學 === 會計學系碩士班 === 94 === The code of stock repurchase has been implemented in Taiwan since 2000 and allows listed firms to repurchase their own shares from stock market. Thus it makes the amount and timing of stock repurchase become open information for us to observe. The aim of this study is to investigate the relationship between the amount and timing of stock repurchase and earnings per share management. The samples are the TSE and OTC listed companies that have repurchased their stocks during 2000 to 2006. This study establishes the following EPS Management related hypotheses：(1)The more additional issuance of common stocks during the year, the more shares the firm will repurchase.(2)If the growth rate of EPS is less than the past average growth rate, the firm will increase the amount of stocks repurchase. (3)In order to offset the dilution effect on EPS from the additional issuance of common stocks, the timing of stock repurchase will be close to the timing of the additional issuance.(4)If the growth rate of EPS is less than the past average growth rate, the firm will repurchase stocks earlier. The empirical results of this study support all the EPS Management related hypotheses. That is to say that the more additional issuance of common stocks during the year or the growth rate of EPS is less than the past average growth rate, the more shares the firm will repurchase. Moreover, the timing of stock repurchase will be close to the timing of the additional issuance and the firm will repurchase stocks earlier when the growth rate of EPS is less than the past average growth rate.