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Article: Real Effects of Share Repurchases Legalization on Corporate Behaviors

TitleReal Effects of Share Repurchases Legalization on Corporate Behaviors
Authors
KeywordsShare repurchases
Payout
Investment
Innovation
Firm performance
Issue Date2021
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jfec
Citation
Journal of Financial Economics, 2021, v. 140 n. 1, p. 197-219 How to Cite?
AbstractWe use staggered share repurchases legalization from 1985 to 2010 across the world to examine its impact on corporate behaviors. We find that share-repurchasing firms do not cut dividends as a substitution. The cash for repurchasing shares comes more from internal cash than external debt issuance, leading to reductions in capital expenditures and R&D expenses. While this strategy boosts stock prices, it results in lower long-run Tobin's Q, profitability, growth, and innovation, accompanied by lower insider ownership. Tax benefits and paying out temporary earnings are two primary reasons that firms repurchase.
Persistent Identifierhttp://hdl.handle.net/10722/290491
ISSN
2023 Impact Factor: 10.4
2023 SCImago Journal Rankings: 13.655
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorWang, Z-
dc.contributor.authorYin, QE-
dc.contributor.authorYU, L-
dc.date.accessioned2020-11-02T05:42:59Z-
dc.date.available2020-11-02T05:42:59Z-
dc.date.issued2021-
dc.identifier.citationJournal of Financial Economics, 2021, v. 140 n. 1, p. 197-219-
dc.identifier.issn0304-405X-
dc.identifier.urihttp://hdl.handle.net/10722/290491-
dc.description.abstractWe use staggered share repurchases legalization from 1985 to 2010 across the world to examine its impact on corporate behaviors. We find that share-repurchasing firms do not cut dividends as a substitution. The cash for repurchasing shares comes more from internal cash than external debt issuance, leading to reductions in capital expenditures and R&D expenses. While this strategy boosts stock prices, it results in lower long-run Tobin's Q, profitability, growth, and innovation, accompanied by lower insider ownership. Tax benefits and paying out temporary earnings are two primary reasons that firms repurchase.-
dc.languageeng-
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jfec-
dc.relation.ispartofJournal of Financial Economics-
dc.subjectShare repurchases-
dc.subjectPayout-
dc.subjectInvestment-
dc.subjectInnovation-
dc.subjectFirm performance-
dc.titleReal Effects of Share Repurchases Legalization on Corporate Behaviors-
dc.typeArticle-
dc.identifier.emailWang, Z: wangzg@hku.hk-
dc.identifier.authorityWang, Z=rp02039-
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/j.jfineco.2020.10.008-
dc.identifier.scopuseid_2-s2.0-85096118304-
dc.identifier.hkuros317746-
dc.identifier.volume140-
dc.identifier.issue1-
dc.identifier.spage197-
dc.identifier.epage219-
dc.identifier.isiWOS:000625883200009-
dc.publisher.placeNetherlands-
dc.identifier.issnl0304-405X-

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