eng Science and Education Publishing Journal of Finance and Accounting 2333-8857 2015-08-09 3 2 18 36 10.12691/jfa-3-2-2 JFA2015322 article Xiaochun Liu xliu@uca.edu 1 Hao Wang 2 Department of Economics, Finance and Insurance & Risk Management, University of Central Arkansas, Conway AR, USA Model Development Department, Regions Bank, Birmingham AL, USA This paper proposes a new theory to explain the behavior of share repurchases by assuming heterogeneity in investors' beliefs. This new theory provides testable hypotheses that are examined empirically in this paper. Our empirical results show strong evidence for the explanation power of investors' opinion divergence in firms repurchasing shares, even after considering controlling variables such as the undervaluation-signaling hypothesis. The results are also robust to various measures of investors' divergent opinions in open market repurchases. http://pubs.sciepub.com/jfa/3/2/2/jfa-3-2-2.pdf investor heterogeneity in beliefs undervaluation signaling hypothesis information asymmetry divergence of opinion firm valuation asset pricing anomalies