Why Do Firms Repurchase Stock?
Year: 2000
Type: article
Abstract: Forthcoming in Journal of BusinessIn this paper, I investigate the relation between stock repurchases and distribution, investment, capital structure, corporate control, and compensation policies over the 1977 to 1996 period. I allow the significance of each motive to change over time to account for adjustments in the percentage of firms influenced by each motive. I find that, throughout the sample period, firms repurchase stock to take advantage of potential undervaluation and, in many periods, to distribute excess capital. However, firms also repurchase stock during certain periods to alter their leverage ratio, fend off takeovers, and counter the dilution effects of stock options. 1
Source: The Journal of Business
DOI: 10.1086/209646
Author: Amy K. Dittmar
Institution: University of Michigan
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1982596759