From the abstract:
"...article surveys the theoretical and empirical studies on share repurchases. Share repurchases have surpassed cash dividends and become the dominant form of corporate payouts since the last decade. This study provides a brief description of five major types of share repurchases and considers the motives that influence firms’ repurchase decisions. Specifically, we examine regulatory and tax considerations, agency costs of free cash flows, signaling and undervaluation, capital structure, takeover deterrence, and employee stock options. The review indicates that the existing literature provides ample support for several of these motivations while others merit further investigation."and a fast look-in from the paper:
"Firms can buy back their shares through five different mechanisms: (1) fixed-price tender offers, (2) Dutch-auction tender offers, (3) open-market share repurchases, (4) transferable put-rights distributions, and (5) targeted stock repurchases."Cite: Hsieh, Jim and Wang, Qinghai,Stock Repurchases: Theory and Evidence(April 2009). Available at SSRN: http://ssrn.com/abstract=1395943
This one will fit perfectly into any corporate finance class! It will be required reading for next semester in my classes.
1 comment:
If I remember correctly, Shiller's work on excess stock market volatility used dividend data but did not include stock buy backs. When other studies included stock buy backs in the dividend data the excess volatility disappears.
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