Information signalling of common stock repurchase announcements: Australian evidence

Stock repurchases (or share buy-backs) have become increasingly popular among Australian companies. One of the main aims of announcing a stock repurchase by a listed company is signalling the market that its shares are currently underpriced. When market reacts to the signal, price of the shares is expected to increase immediately after the announcement. While there are several ways of repurchasing shares, 'on-market buy-backs' is the most popular method of stock repurchases in Australia. Australian listed companies have announced more than two hundred on-market share buy-backs over the past three years. The aim of this paper is to examine the information signalling effects of these on-market buy-back announcements. If the signal is considered positively (negatively) by the market, the price of the repurchasing company's shares should increase (decrease) immediately after the announcement. If there is no information content in the announcement, the price will remain the same. In this study, signalling effect of share buy-back announcements was examined using most recent Australian data. The total population of on-market buy-back announcements during the period from January 1, 2000 to March 10, 2003 was included. The abnormal market return over the short-run (announcement day and 9 trading days centred on the announcement date) was computed using the All Ordinaries Accumulation Index as the reference portfolio. The daily Abnormal Returns (AR) and Cumulative Abnormal Returns (CAR) during the event period were computed. The results strongly support the information-signalling hypothesis of share buy..backs. Australian market generally considers announcement of on~market share repurchases as signalling of insider information that shares are currently underpriced.

Store names information signalling : a credibility perspective

This study is about store names as brand signals. Using the framework of Erdem and Swait (1998), hypotheses are developed regarding the effects of store names on consumers' expected product utility. It is relevant to study store names as brand signals because store names can act as additional signals in the consumer purchase decision process. The study focuses in particular on the effects of store name credibility on perceived risk, information costs and perceived product quality. The hypotheses will be tested on data that are currently being collected in a survey among two hundred students.

Antecedents of brand credibility under asymmetrical information

This study focuses on the antecedents of brand credibility and validates part of the model presented by Erdem and Swait (1998). Following the signalling literature, we argue that under asymmetrical information, the importance of brand credibility stems from the capability of brands to inform consumers who are uncertain about product attributes. Indeed, firms may use brands to notify consumers about product positions and to assure that their product claims are credible. Using information economics as theoretical background, the proposed perspective determines how credibility is shaped. Data was collected across a number of consumers in Australia via a self-report survey and a structural equation model (SEM) was estimated. The results provide empirical evidence and support the work of Erdem and Swait (1998).

All signals are not equal: acoustic signalling of individuality, sex and breeding status in a cooperative breeder

Repeated interactions between individuals in socially living animals select for the evolution of signals that convey information identifying individuals or categories of individuals, which may enable the discrimination of familiar versus unfamiliar individuals. Such information may help animals maximize their inclusive fitness by adjusting their own behaviour, allowing them to avoid conflict, preferentially direct help and/or ignore unreliable individuals. Acoustic signals in birds provide the potential to encode individual-specific information. We examined the degree to which individual identity, sex, breeding status, group membership and genetic relatedness were related to variability in six different call types, which occurred across a variety of different behavioural contexts in the apostlebird, Struthidea cinerea, a socially living and cooperatively breeding Australian passerine. We demonstrated that not all calls reflected the same extent of information. Of the six call types, call variation was related to individual identity in three call types, breeding status in two call types and sex and group relatedness in one call type. Finally, variation in two call types was not related to any of the measured variables. Our results suggest that some, but not all, acoustic signals in apostlebirds may be selected for individual distinctiveness between individuals and categories of individuals (male versus female, breeder versus nonbreeder), and these signals may be important in determining levels of cooperation and interaction between individuals in this cooperatively breeding society. © 2014 The Association for the Study of Animal Behaviour.

Lemons on the web: a signalling approach to the problem of trust in Internet commerce

Asymmetric information is at the heart of situations involving trust. In the case of B2CInternet commerce, the information asymmetry typically relates to the difficulty that consumershave of distinguishing between ‘‘trustworthy’’ and ‘‘untrustworthy’’ Web merchants. Theimpasse can be resolved by the use of signals by trustworthy Web merchants to differentiatethemselves from untrustworthy ones. Using an experimental design where subjects are exposedto a series of purchase choices, we investigate three possible signals, an unconditional moneybackguarantee, branding, and privacy statement, and test their efficacy. Our empirical resultsconfirm the predictions suggested by signalling theory.