Actual share repurchases, private information, and stock price crash risk: Evidence from China’s reformed open market repurchase program

Using a large sample of Chinese companies from 2018 to 2023, a period marked by China’s reform and liberalization of share repurchase regulations, this study investigates the impact of actual share repurchases on stock price crash risk. The reformed program’s strict disclosure and timeliness requirements allow us to explore the information channel and assess the real economic effects of repurchases. We find a significant negative relationship between actual share repurchases and stock price crash risk. In the economic channel analysis, we show that repurchases could provide firm-specific information to investors. Further, we document a stronger risk-mitigation effect when managers have a greater incentive to withhold private information. Overall, our research highlights the evolving role of share repurchases in the financial market.