Abstract
Australia simplified the legislative framework governing share repurchases in 1995. We analyse detailed daily data on Australian companies’ open market repurchases (OMRs) to document the extent of Australian OMRs and investigate company compliance with buyback regulations. We compare Australian regulation with that in other jurisdictions. Similar to other markets, Australian companies must follow exchange rules regarding the price of their transactions. We find companies are generally compliant with the existing regulations governing OMRs. However, unlike in most other countries, Australian regulations do not restrict the volume of shares companies may repurchase on-market in any day. In addition, the timing of company repurchases is generally unregulated. As a result, repurchasing companies dominate the market for their own shares on a substantial portion of repurchase days, with the potential to distort market prices. Policy changes related to restricting the timing and trading volume of repurchase trades may need to be considered.
| Original language | English |
|---|---|
| Pages (from-to) | 230-254 |
| Number of pages | 25 |
| Journal | Company and Securities Law Journal |
| Volume | 37 |
| Issue number | 4 |
| Publication status | Published - 2020 |
Keywords
- repurchase
- buyback
- open market
- regulation