Economic Shocks and Share Repurchases

52 Pages Posted: 12 Oct 2015 Last revised: 9 Feb 2016

See all articles by Hsuan‐Chi Chen

Hsuan‐Chi Chen

University of New Mexico - Anderson School of Management

Joel T. Harper

Miami University of Ohio - Department of Finance

Subramanian R. Iyer

University of New Mexico

Date Written: October 11, 2015

Abstract

The external environment affects firm payout policies. A firm’s behavior during positive and negative external shocks could be different from what theories have postulated. Several theories have been proposed for share repurchases. Using the financial crisis and quantitative easing period as a background, we test these theories. Based on our empirical tests, we find firms that have higher cash flows, lower leverage, fewer financial constraints, pay smaller/or no dividends, or higher takeover probabilities are more likely to announce repurchase programs across both periods. However, the popular motives for share repurchase are inconsistent in explaining related aspects such as size of the repurchase program, actual share repurchases, and completion.

Keywords: Share Repurchases, Economic Shocks

Suggested Citation

Chen, Hsuan-Chi and Harper, Joel T. and Iyer, Subramanian R., Economic Shocks and Share Repurchases (October 11, 2015). Available at SSRN: https://ssrn.com/abstract=2672695 or http://dx.doi.org/10.2139/ssrn.2672695

Hsuan-Chi Chen

University of New Mexico - Anderson School of Management ( email )

1924 Las Lomas NE
Albuquerque, NM 87131
United States

HOME PAGE: http://www.mgt.unm.edu/faculty/directoryArea.asp#FIN

Joel T. Harper

Miami University of Ohio - Department of Finance ( email )

Oxford, OH 45056
United States

Subramanian R. Iyer (Contact Author)

University of New Mexico ( email )

MSC 05-3090
U of New Mexico
Albuquerque, NM 87131
United States

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