The determinants of share repurchases in Europe

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Abstract

In this paper, we assess which firm-characteristics are associated with a firm's decision to announce a share repurchase programme in a cross-country framework. In the models, we incorporate firm-specific financial characteristics and measures of share price performance. We find that size, cash dividends, and ownership concentration consistently have a significant impact on share repurchase announcements in all three countries under study. However, the share price performance does not explain the decision to announce a share repurchase. The robustness of the proposed models is investigated across different dimensions of sample-matching methods and with a boot-strap technique. Finally, we construct a number of models with a robust predictive ability of a firm's likelihood to announce a share repurchase
Original languageEnglish
Pages (from-to)65-76
Number of pages12
JournalInternational Review of Financial Analysis
Volume27
Early online date7 Jan 2013
DOIs
Publication statusPublished - Apr 2013

Keywords

  • share repurchases
  • determinants
  • information asymmetry
  • logit model
  • boot-strap technique

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