Repurchase Dividend Reinvestment Plans (Repurchase DRIPS)

Abstract

<p class="MsoBodyTextIndent" style="text-align: justify; line-height: normal; text-indent: 0in; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="font-family: Times New Roman;"><span style="font-size: 10pt;">We investigate the determinants of firms' decision to offer </span><span style="font-size: 10pt; mso-fareast-language: KO;">Repurchase </span><span style="font-size: 10pt;">Dividend Reinvestment Plans (</span><span style="font-size: 10pt; mso-fareast-language: KO;">Repurchase </span><span style="font-size: 10pt;">DRIPs). </span><span style="font-size: 10pt; mso-fareast-language: KO;">F</span><span style="font-size: 10pt;">irm size, managerial share holding, and </span><span style="font-size: 10pt; mso-fareast-language: KO;">free cash flow</span><span style="font-size: 10pt;"> are statistically significant in explaining a firm’s </span><span style="font-size: 10pt; mso-fareast-language: KO;">decision to employ</span><span style="font-size: 10pt;"> </span><span style="font-size: 10pt; mso-fareast-language: KO;">Repurchase </span><span style="font-size: 10pt;">DRIPs.<span style="mso-spacerun: yes;">  </span></span><span style="font-size: 10pt; mso-fareast-language: KO;">We find</span><span style="font-size: 10pt;"> that managerial stock ownership </span><span style="font-size: 10pt; mso-fareast-language: KO;">is negatively related to use of Repurchase </span><span style="font-size: 10pt;">DRIPs</span><span style="font-size: 10pt; mso-fareast-language: KO;">. E</span><span style="font-size: 10pt;">conomies of scale in marketing and maintaining DRIP</span><span style="font-size: 10pt; mso-fareast-language: KO;"> program </span><span style="font-size: 10pt;">and </span><span style="font-size: 10pt; mso-fareast-language: KO;">excess cash flows</span><span style="font-size: 10pt;"> are</span><span style="font-size: 10pt; mso-fareast-language: KO;"> positively related to Repurchase </span><span style="font-size: 10pt;">DRIP adoption.<span style="mso-spacerun: yes;">  </span></span><span style="font-size: 10pt; mso-fareast-language: KO;">We find no evidence that information asymmetry is a major motivation to the likelihoods of using Repurchase </span><span style="font-size: 10pt;">DRIPs</span><span style="font-size: 10pt; mso-fareast-language: KO;">.</span></span></p>