Announcement Impact of Common Stock Repurchases on its Prices by Formwork of Signal Theory
(An Analytical Study in Kuwait Stock Exchange)
A Dissertation Submitted By
Sa’ad Majeed Abd Ali AL – Janabi
T0
Council of the College of Administration and Economics, Kerbala University, in Partial Fulfillment
of the Requirements for PH.D. Degree in Business Administration Sciences.
Under The Supervision
Ass. Prof. Dr. Maitham Rabee AL-hasnawi

Abstract :
This study aimed to reveal the impact of repurchases announcement of common stock on
its prices in formwork of signal theory , and the role of this theory in explaining processing
the informational asymmetry in a way that participates in increasing efficiency of the market
and the availability of information to help investors making decisions more accurately,
repurchases is a positive signal sent to the market referring to the fact that the stock prices
are below their fair value . The study focused on a number of main and sub – dimensions of
the problem for which a number of hypotheses ,were devised : –
 Not to announcement of common stock repurchases of the impact on its Prices in
formwork of signal theory .
 The Kuwait Stock Exchange is not an efficient level in half a strong response to the
informational content of the of repurchase announcement .
The study sample included 170 the announcement made by 65 firm listed on the Kuwait
Stock Exchange for the period from 1/1/2012 to 24/4/2015 . It is worth mentioning that the
selection of Kuwait Stock Exchange was a means , not an end, as the end, since the
foundation is to study the Iraq Stock Exchange but for technical reasons related with the
absence of the academic awareness needed for repurchase programs by the firms on the one
hand and the dealers in the market from the other hand , this creative mechanism of the
policy of payment was not used and the many advantages of it were lost which that can
come her of all the parties, which starts with the interests of the individual investor and does
not end with bridging the gap of informational asymmetry and improve the efficiency of the
market specialized of the rare economy resources .
Through the use of various financial and statistical methods using (EXCEL) for analyze the
variables of the study and test its hypotheses, the study reached the following conclusions,
most important of which is that of the announcement of repurchase influential informational
content conducive to achieving abnormal returns, means suffering Kuwait market from
problem asymmetry of informational, and that the size of the firm , as well as announcement
frequency and a style of the stock and the amount of stock reacquired actually, relationship
on the strength of the signal sent to the market through the repurchasing announcement , all
of which confirms that the announcement of Common Stock Repurchases impact on it prices
in formwork of signal theory, this is contrary to the first hypothesis . The study also proved
that there was an inefficient response to the informational content of the repurchase
announcement by the Kuwait Stock Exchange , this confirms the market inefficiency in a
half strong manner and this supports the truth of second hypothesis of the study . Based on
this , the study reached a number of recommendations including necessity of adopting on the
signal theory especially in inefficient financial markets to reduce the problem of
informational asymmetry between insiders and outside investors, because this theory is one
of the tools that provide information to investors in the financial markets and contribute to
raising the efficiency of the financial market through the reduction of informational
asymmetry gap. It also sends signals carrying with it the good information on repurchase help
of investors making decisions of rational .