Political Connections, Share Repurchases, and Shareholder Value
53 Pages Posted: 12 Sep 2019 Last revised: 18 Nov 2019
Date Written: September 4, 2019
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: Suggested Citation