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Are Buybacks Good for Long-Term Shareholder Value? Evidence from Buybacks around the World

74 Pages Posted: 26 Sep 2013 Last revised: 15 May 2017

Alberto Manconi

Bocconi University - Department of Finance

Urs Peyer

INSEAD - Finance

Theo Vermaelen

INSEAD - Finance

Date Written: May 13, 2017

Abstract

Using a sample of over 9,000 buyback announcements from 31 non-U.S. countries, we find support for the results of studies based on U.S. data: on average, share repurchases are associated with significant positive short-term and long-term excess returns. However, not all buybacks are the same: whether buybacks are good for long-term value depends on governance quality, as well as on whether buybacks have to be approved by boards or shareholders. Higher governance quality and board approval are associated with increases in shareholder value in the long run. We do not find that these long-term excess returns are simply a compensation for takeover risk or have disappeared in recent years.

Keywords: buyback, share repurchase, governance, market timing, agency problems, global regulation

JEL Classification: G3

Suggested Citation

Manconi, Alberto and Peyer, Urs and Vermaelen, Theo, Are Buybacks Good for Long-Term Shareholder Value? Evidence from Buybacks around the World (May 13, 2017). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 436/2014; INSEAD Working Paper No. 2013/101/FIN. Available at SSRN: https://ssrn.com/abstract=2330807 or http://dx.doi.org/10.2139/ssrn.2330807

Alberto Manconi

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://mypage.unibocconi.eu/albertomanconi/

Urs C. Peyer (Contact Author)

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France
+33 1 6072 4178 (Phone)
+33 1 6072 4045 (Fax)

Theo Vermaelen

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France
33 1 60 72 42 63 (Phone)
33 1 60 72 40 45 (Fax)

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