Testing the managerial timing ability: Evidence from stock repurchases in Japan

In this paper, we test whether corporate managers have the ability to time the market, which is still controversial in the corporate finance literature. In empirical analyses, we show that firms conduct share repurchase programs when stock prices decreased in the previous month and that firms conducting market share repurchase programs outperform the market over the subsequent months. The evidence implies that corporate managers are informed and/or skillful at detecting mispricing in the stock markets.