Does managerial market timing with stock repurchases exist in stock market? Evidence from Thailand

This study examines the presence of managerial market timing with stock repurchases in the Stock Exchange of Thailand (SET) from 2008 to 2017. We find that managerial market timing with stock repurchases does not exist in an emerging market (namely, Thailand) supporting the theory of pseudo market timing, as the probability of stock repurchases is not related to undervalued stocks. However, there are other motivations for conducting stock repurchases rather than managerial market timing including the distribution of excessive cash flow due to high operating income and no good future investment opportunity, and the change of capital structure because of underleverage. Our findings are supportive to the free cash flow, capital market allocation, and trade-off theories. In addition, we also find that timing firms tend to suffer from the deterioration of Tobin q ratio, market value added (MVA) and economic value added (EVA), and they do not rebalance their capital structure after this event. • Managerial market timing with stock repurchases does not exist in Thailand supporting the theory of pseudo market timing. • Other motivations for stock repurchases; the distribution of excessive cash flow, and the change of capital structure. • Timing firms tend to suffer from the deterioration of corporate value. • Repurchasing firms with undervalued stocks do not rebalance capital structure after this event. • Our findings are supportive to the free cash flow, capital market allocation, and trade-off theories.