An empirical comparison between operations of stabilization funds and stock repurchases in Korea

We examine stock repurchases in Korea. Korea allows unique mechanisms, stock stabilization funds. Our results indicate that these funds are treated by the market as a weak form of repurchase. Firms in Korea that announce open market repurchases repurchase 90% of the announced shares within 3 months. This compares to a smaller percentage in 3 or more years in the United States. The market response in Korea to a repurchase announcement is similar to the United States. Tests of the determinants of the market response to announcements indicate a positive relation between ownership concentration and the market response.