Share repurchases and intangible assets

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.