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The Option and Decision to Repurchase Stock


  • Rohit Sonika,

  • Nicholas F. Carline,

  • Mark B. Shackleton

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    • Rohit Sonika is a Lecturer/Assistant Professor at the ICMA Centre at the University of Reading in Reading, UK, and at the Xfi Centre for Finance and Investment at the University of Exeter in Exeter, UK from academic year 2014/15. Nicholas F. Carline is a Lecturer/Assistant Professor at the Birmingham Business School at the University of Birmingham in Birmingham, UK. Mark B. Shackleton is a Professor in the Department of Accounting and Finance at the Lancaster University in Lancaster, UK.

  • We are especially grateful to an anonymous referee and Raghavendra Rau (Editor). The paper has also benefited from the comments and suggestions of Shantanu Banerjee, Bert D'Espallier, Paul Guest, Ranko Jelic, Aneel Keswani, Steven Young, and seminar participants at the Corporate Finance Day (Ghent), the Financial Management Association Annual Meeting (Atlanta), the Midwest Finance Association Annual Meeting (New Orleans), Cass Business School, Lancaster University, University of Birmingham, and University of Cambridge. Work on the paper was undertaken while the first author was a doctoral student at Lancaster University.


Open-market repurchase programs provide firms with the flexibility to manage the cash and risk aspects of their operations. We examine at which stage cash and risk matter in the typical stages of a repurchase program: announcement, implementation, and withdrawal. Cash and risk considerations appear to matter only at the implementation stage, and partially negate the traditional signaling effect around program announcement.