Stock repurchases and treasury share sales: Do they stabilize price and enhance liquidity?

Research output: Contribution to journalArticle


Can companies reduce the volatility and increase the liquidity of their stocks by trading them? In the context of the Italian stock market, where companies have far more leeway to sell as well as buy their own stocks than in the U.S., the answer is yes. We examine the effects of trading (open-market share repurchases and treasury shares sales) on liquidity (bid-ask spread) and volatility (return variance). Further, we examine the impact of shareholder approvals of repurchase programs on liquidity and volatility. We find clear evidence that trading increases liquidity and reduces volatility. These results are consistent with our analysis of the motives Italian companies give for making share repurchases. © 2011 Elsevier B.V.

Bibliographical metadata

Original languageEnglish
Pages (from-to)1558-1579
Number of pages21
JournalJournal of Corporate Finance
Issue number5
Publication statusPublished - Dec 2011