The value of open market repurchases of closed-end fund shares

We illustrate the value to shareholders when closed-end funds repurchase sh ares at a discount from net asset value. Repurchases increase share price e ven when there is no asymmetric information concerning the value of the und erlying assets and the percentage discount remains unchanged following the repurchase. Expected gains to shareholders are derived from capturing the d iscount on the assets associated with the shares repurchased. In an analysi s of 27 open market repurchase announcements by closed-end funds, the regre ssion coefficient estimate that measures the association between the actual excess return and the expected increase in share price is essentially 1.0.