Signaling Strength And The Announced Size Of An Open-Market Repurchase

An open question exists as to whether the announced size of an open-market repurchase (OMR) possesses positive signaling effects. Relying on short sales that occur during the five trading days that follow an OMR announcement as an indication of the signaling effect of the size of the OMR program, I find that post-announcement short sales tend to decrease with positive returns surrounding OMR announcements but that post-announcement short sales do not decrease with the announced size of an OMR program. Therefore, I conclude that while announcements of OMR programs serve as positive signals, in general, the announcement of a larger OMR program does not possess a stronger positive signal.