An Empirical Investigation of Australian Share Buybacks

Abstract

Discussion of share buybacks or repurchases is topical. Yet share buybacks are a relatively recent phenomenon in Australia. Until 1989, they were prohibited. In this article we undertake the first empirical investigation of Australian share buybacks. The article commences by reviewing the Australian debate on buybacks and examines why so few buybacks have been undertaken in Australia. We then discuss reasons why companies undertake buybacks and, as part of this discussion, survey the results of prior studies undertaken in the United States which investigate reasons for buybacks in that country. This is followed by an explanation of the data and methodology that we employ in our own study and the results of the study. We conclude by discussing the implications of our results for the legal regulation of buybacks.