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Determinants and Consequences of Share Repurchase Decisions
Nova Southeastern University, Fort Lauderdale, USA
Nova Southeastern University, Fort Lauderdale, USA
Nova Southeastern University, Fort Lauderdale, USA
- 1 Nova Southeastern University, Fort Lauderdale, USA
- 2 Nova Southeastern University, Fort Lauderdale, USA
- 3 Nova Southeastern University, Fort Lauderdale, USA
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Abstract
This paper explores the determinants of share repurchase decisions within the context of a modern conceptual framework. Empirically, it categorizes such determinants by firm size, stage of the product life cycle, membership in the technology sector, ownership of overseas cash reserves, and institutional ownership. Share repurchases were used to boost earnings per share temporarily. Such effects dissipated over 1 year and 5 years. Certain categories of firms used share repurchase to grow through acquisitions, while others used share repurchase to prevent takeovers. This paper is the first study to examine share repurchase through categories of determinants within the context of short and long-term post-share repurchase performance.
KeywordsShare RepurchaseAgency TheoryEarnings per ShareFirm Performance
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