期刊
JOURNAL OF FINANCIAL ECONOMICS
卷 140, 期 1, 页码 197-219出版社
ELSEVIER SCIENCE SA
DOI: 10.1016/j.jfineco.2020.10.008
关键词
Share repurchases; Payout; Investment; Innovation; Firm performance
Share repurchases lead to reduced capital expenditures and R&D expenses, lower Tobin's Q, profitability, growth, and innovation, as well as decreased insider ownership. Tax benefits and paying out temporary earnings are the primary reasons for firms to engage in repurchases.
We 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. (C) 2020 Elsevier B.V. All rights reserved.
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