The impact of internal and external factors on the relationship between information opacity and open-market repurchases

This study investigates the linkage between information opacity and open-market share repurchases in emerging markets. We measure information opacity by accruals quality and find that firms with higher levels of information opacity experience more positive market reactions following repurchase announcements, which remain after controlling for some firm characteristics. We document that information opacity is positively related to announcement returns only in firms with strong corporate governance, controlled by a single family, or with a low level of foreign ownership. Our results reveal that the positive relationship between information opacity and announcement returns still exists even during the global financial crisis.