Voluntary disclosures around share repurchases

Managers increase the frequency and magnitude of bad news announcements during the 1-month period prior to repurchasing shares. To a lesser extent, they also increase the frequency and magnitude of good news announcements during the 1-month period following their repurchases. These results are consistent with Barclay and Smith's [1988. Corporate payout policy: Cash dividends versus open-market repurchases. Journal of Financial Economics 22, 61–82.] conjecture that share repurchases, unlike dividends, create incentives for managers to manipulate information flows. We further show that managers provide downward-biased earnings forecasts before repurchases and that managers’ propensity to alter information flows prior to share repurchases increases with their ownership interest in the firm.