Work

Are Share Repurchases Really Flexible?

Year: 2025

Type: article

Abstract: This article documents a trend of declining flexibility in share repurchase policies over the last 4 decades. We show that repurchases have become particularly sticky for firms with repurchase programs in place. We also exploit the additional inflexibility within existing repurchase programs to show that repurchase stickiness can have real effects for firms. Using the 2008 financial crisis as a shock to firms’ ability to raise capital, we find that firms with ongoing share repurchase programs ending after Dec. 2007 reduced investment, employment, and R&D spending by more than similar firms with programs ending before the onset of the crisis.

Source: Journal of Financial and Quantitative Analysis

DOI: 10.1017/s002210902500016x

Authors: Heitor Almeida, Ruidi Huang, Yuhai Xuan

Institutions: University of Illinois Urbana-Champaign, Southern Methodist University, University of California, Irvine

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,550

OpenAlex ID: W4408944581