Firms with more intangible assets are more likely to repurchase shares and
have more positive repurchase announcement returns, as predicted. Because i
ntangibles generally are unrecognized, share repurchases represent a potent
ial cost to an incomprehensive accounting model. Idle cash is positively re
lated to repurchase likelihood and negatively related to announcement retur
ns, as predicted. Contrary to predictions, general information asymmetry is
negatively related to repurchase likelihood, but announcement returns are
positively related, as predicted. Tests include controls for stock option p
lans, dividends, and book-to-market ratios, which generally are significant
as predicted. Using change variables in the repurchase likelihood tests yi
elds consistent inferences. (C) 1999 Elsevier Science B.V. All rights reser
ved.