The Impact of asset repurchases and issues in an experimental market
- Author(s)
- Owen Powell, Ernan Haruvy, Charles Noussair
- Abstract
We create an experimental asset market in which the value of the shares is independent of the quantity outstanding, and find that (i) repurchases increase, whereas share issues decrease, the price of the asset. These effects are consistent with downward-sloping demand for the asset. (ii) This behavior is consistent with three trader types - fundamental, speculator, and momentum - interacting in the market. (iii) Share issues drive prices down toward, but not beyond, fundamental values. This downward resistance at the fundamental value is predicted by the impact of an intervention on the proportion of units and cash held by each trader type.
- Organisation(s)
- Department of Economics, Vienna Center for Experimental Economics
- External organisation(s)
- University of Texas, Dallas, Tilburg University
- Journal
- Review of Finance: the journal of the European Finance Association
- Volume
- 18
- Pages
- 681-713
- No. of pages
- 33
- ISSN
- 1572-3097
- DOI
- https://doi.org/10.1093/rof/rft007
- Publication date
- 04-2014
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502047 Economic theory
- ASJC Scopus subject areas
- Economics and Econometrics, Accounting, Finance
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/the-impact-of-asset-repurchases-and-issues-in-an-experimental-market(590156a0-5a56-4ecb-bee9-616925db9750).html