Political Connections and Share Repurchases
43 Pages Posted: 12 Sep 2019 Last revised: 8 Sep 2021
Date Written: September 4, 2019
This study examines how political connections affect post-buyback performance. We find that politically connected firms generated higher post-buyback abnormal stock and operating returns than unconnected firms. These differences persist after controlling firm characteristics, using an instrumental variable approach, and matching estimation. The probability of a company repurchasing shares and the value of shares repurchased increases with political connectedness. Taken together, our study provides strong evidence that political connections have a significant effect on share repurchase activities.
Keywords: Share Repurchase; Political Connections; Stock Returns
JEL Classification: G14, G32, G35
Suggested Citation: Suggested Citation