Political Connections, Share Repurchases, and Shareholder Value

53 Pages Posted: 12 Sep 2019 Last revised: 18 Nov 2019

See all articles by Modestus Nnadi

Modestus Nnadi

University of Salford

Ghulam Sorwar

University of Salford

Eileen Roddy

Salford University

Date Written: September 4, 2019

Abstract

We find that political connections are positively associated with the probability of a company repurchasing shares, and the value of shares repurchased. The effect of political connections on share repurchase decisions persists whether a firm is connected either through a Republican or Democratic politician. Further analysis shows that politically connected boards generated higher stock returns around share repurchase announcement period and in the long-term than their non-connected counterparts. Our results are robust to controls for firm characteristics, firm fixed effects, using a two-stage regression, and matching estimation.

Keywords: Share Repurchase; Political Connections; Stock Returns

JEL Classification: G14, G32, G35

Suggested Citation

Nnadi, Modestus and Sorwar, Ghulam and Roddy, Eileen, Political Connections, Share Repurchases, and Shareholder Value (September 4, 2019). Available at SSRN: https://ssrn.com/abstract=3448055 or http://dx.doi.org/10.2139/ssrn.3448055

Modestus Nnadi (Contact Author)

University of Salford ( email )

University of Salford
M5 4WT Salford, Lancashire M5 4WT
United Kingdom

Ghulam Sorwar

University of Salford ( email )

University of Salford
M5 4WT Salford, Lancashire M5 4WT
United Kingdom

Eileen Roddy

Salford University ( email )

Salford Business School
University of Salford, Manchester
M5 4WT
United Kingdom

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