Overseas Buybacks on the ASX: Disclosure Requirements and Signalling Impact

This article investigates the extent to which disclosure requirements, price reaction and the signalling impact of overseas buybacks are different to ASX domestic buybacks. It finds that overseas buybacks in some cases are not required to, and often do not, provide the same level and quality of formal disclosure as domestic buybacks. This reduced disclosure of overseas buybacks is particularly evident for the initial buyback announcement. This article shows that the immediate market response to both initial and final buyback notifications varies depending on whether or not the buyback is conducted overseas. Moreover, identification of overseas buybacks can be used as a signalling mechanism having a distinct and more negative longer-term abnormal price reaction. This variation in initial market reaction as well as the longer term signalling properties confirms the inherent value of such information and provides support for the overseas nature of the buyback to be disclosed.