Why do Firms Undertake Accelerated Share Repurchase Programs?

The purpose of the paper is to consider the mechanism of share repurchases in the context of the coronaeconomy and the COVID-19 pandemic. The English- and Russian-language publications discussing share repurchases from the perspective of the stakeholder approach in corporate governance are reviewed. The practice of the Russian firms implementing share repurchase programs is analyzed, with the focus on the companies included in the Sustainable Development Ranking-100. It is concluded that share repurchases should be studied with regard to the impact they have on the interests of a wide range of company’s financial and non-financial stakeholders, and to the mutual influence of buybacks and parameters of sustainable economic development.

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Open Market Repurchase Programs - Evidence from Finland

International Journal of Economics and Finance ◽

10.5539/ijef.v9n12p13 ◽

2017 ◽

Vol 9 (12) ◽

pp. 13

Author(s):

Kenneth Högholm ◽

Victor Högholm

Keyword(s):

Share Repurchase ◽

Open Market ◽

Announcement Effect ◽

Data Set ◽

Event Window ◽

The Past ◽

Disclosure Requirements ◽

Repurchase Programs ◽

A Company ◽

Positive Effect

Share repurchase programs have during the past few decades become an important way of distributing cash to shareholders since they are viewed by managers as more flexible than dividends. Open market repurchase authorizations effectively also give managers an option to repurchase shares when they view their stock as undervalued. This study exploits a data set of open market repurchases programs initiated by Finnish stock market listed companies. Finland is unique with regard to the disclosure requirements of open market repurchase programs, which enables an examination of the information content in both the initiation announcement as well as in the announcement of actual repurchases. The study covers all 293 share repurchase programs initiated between 1998 and 2013. The results show a significant positive announcement effect of about 2 percent on the initiation day. The CAAR over a five day event window is also about 1.5 percent (statistically significant). Furthermore, an additional statistically positive effect of 1.5 percent is found on the first repurchase day (about 1.1 percent over a five day event window). The positive announcement effect is larger for announcements regarding initiations of the first or the second repurchase program for a company.

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