[雙語翻譯]--外文翻譯--保險公司公開市場股票回購公告及其信號（原文）

1、Risk Management and Insurance ReviewC ? Risk Management and Insurance Review, 2013, Vol. 16, No. 1, 47-69 DOI: 10.1111/rmir.12003FEATURE ARTICLEOPEN-MARKET STOCK REPURCHASES BY INSURANCE COMPANIES AND SIGNALINGGow-Cheng

2、Huang Kartono Liano Herman Manakyan Ming-Shiun PanABSTRACTThe signaling hypothesis of share repurchases implies that management uses repurchases to signal either that their firm’s future operating performance will improv

3、e or that shares of their stock are simply underpriced by the market. This study examines which of the two interpretations can better explain open- market share repurchase programs announced by insurance companies. We fi

4、nd no evidence that future-operating performance of insurers improves following the repurchase announcement. In addition, changes in future operating perfor- mance cannot explain the announcement-period abnormal return.

5、Instead, the stock undervaluation prior to the repurchase announcement can significantly explain the announcement-period abnormal return, particularly for life insur- ers. Overall, our results suggest that the positive m

6、arket reaction to insurers’ open-market share repurchase announcements is due to the stock undervalu- ation by the market, but not due to positive information content about future operating performance conveyed in the re

7、purchase announcement.The finance literature has documented significantly positive market reactions around announcements of open-market stock repurchase programs. The most prominent expla- nation for this finding is the

8、signaling hypothesis (Vermaelen, 1981).1 However, there are two interpretations for the positive market reaction under the signaling hypothesis.Gow-Cheng Huang is at the Department of Accounting and Finance, Alabama Stat

9、e University, Montgomery, AL 36101; phone: 334-229-6920; e-mail: ghuang@alasu.edu. Kartono Liano is at the Department of Finance and Economics, Mississippi State University, Mississippi State, MS 39762; phone: 662-325-19

10、81; e-mail: kliano@cobilan.msstate.edu. Herman Manakyan is at the Depart- ment of Economics and Finance, Salisbury University, Salisbury, MD 21801; phone: 410-677-5024; e-mail: hxmanakyan@salisbury.edu. Ming-Shiun Pan is

11、 at the Department of Finance and Sup- ply Chain Management, Shippensburg University, Shippensburg, PA 17257; phone: 717-477-1683; e-mail: mspan@ship.edu. This article was subject to double-blind peer review. 1 In additi

12、on to signaling, share repurchases could be used to distribute excess cash to shareholders(i.e., the free cash flow hypothesis), to support both management and employee stock option exercises, or to increase financial le

13、verage ratio.47OPEN-MARKET STOCK REPURCHASES BY INSURANCE COMPANIES AND SIGNALING 49period. The performance-signaling hypothesis implies that repurchases are associated with an improvement in future operating performance

14、. However, we find no evidence that repurchase insurers exhibit an improvement in return on cash-adjusted assets (and other measures of operating performance) relative to their peers after share repurchase announcements.

15、 In fact, repurchase life insurers underperform their peers in 3 of the 4 years following the announcement. The performance-signaling hypothesis also implies that if share repurchases are a credible signal, managers will

16、 repurchase more shares if they are more optimistic about the future prospects of the firm. Thus, a larger repurchase program is expected to be associated with a better future operating performance. Our result shows that

17、 the size of a repurchase program is not positively related to operat- ing performance following the announcement. Overall, our empirical findings suggest that open-market repurchase programs do not contain any favorable

18、 information about future operating performance of insurance firms.In addition, further analysis does not show that changes in future operating performance can explain the announcement-period abnormal return. However, pr

19、erepurchase stock undervaluation can significantly explain the announcement-period abnormal return, particularly for life insurers. Consequently, our results imply that the positive market reaction to repurchase announce

20、ments by insurance companies is mainly due to the stock undervaluation before the announcement and is consistent with the undervaluation- signaling explanation, but not due to information about future prospects of the in

21、surer and is inconsistent with the performance-signaling explanation.The rest of the article is organized as follows. In the following section, we develop our hypotheses. “Data and Descriptive Statistics” describes the d

22、ata and presents some summary statistics of the sample insurance firms that announced an open-market share repurchase program over the period 1993–2005. In “Operating Performance and Repur- chase Announcements,” we repor

23、t the operating performance of the sample insurance firms and their peers. In “Announcement-Period Abnormal Returns and Changes in Future Performance,” we report the empirical results of the relation between the mar- ket

24、’s reaction to the repurchase announcement and the postrepurchase operating per- formance. “Performance-Signaling Hypothesis and Actual Share Repurchases” repeats the analyses using the sample insurers that actually repu

25、rchase shares. “Conclusions” concludes the article.HYPOTHESES DEVELOPMENTThe market tends to react positively to a share repurchase announcement. Several hy- potheses have been proposed to explain the positive market rea

26、ction. These explanations include the signaling hypothesis (Vermaelen, 1981), the free cash flow hypothesis (Jensen, 1986), the target leverage ratio hypothesis (Bagwell and Shoven, 1988), and the takeover defense hypoth

27、esis (Bagwell, 1991), among others. In this study, we focus on the sig- naling hypothesis of open-market share repurchase programs announced by insurance companies.There are two interpretations for the signaling hypothes

28、is. The first interpretation is the performance-signaling hypothesis. The performance-signaling hypothesis suggests that a stock could be fairly priced based on publicly available information, but is un- derpriced if pri