Share repurchases, coronaeconomy and stakeholders’ interests

Irina Tkachenko,Bela Bataeva,I Tkachenko

doi:10.1051/shsconf/20208902001

Abstract

The purpose of the paper is to consider the mechanism of share repurchases in the context of the coronaeconomy and the COVID-19 pandemic. The English- and Russian-language publications discussing share repurchases from the perspective of the stakeholder approach in corporate governance are reviewed. The practice of the Russian firms implementing share repurchase programs is analyzed, with the focus on the companies included in the Sustainable Development Ranking-100. It is concluded that share repurchases should be studied with regard to the impact they have on the interests of a wide range of company’s financial and non-financial stakeholders, and to the mutual influence of buybacks and parameters of sustainable economic development.

Highlights

The amounts paid to shareholders as share repurchases, rather than dividend payments have increased dramatically over the last few decades
Repurchasing shares, or share buybacks, is a procedure when the issuer buys back its own shares, which may lead to a decrease in the number of freely traded securities and an increase in share prices
Share repurchases were allowed in the United States in1960, but became popular when Rule 10b-18 was passed by Congress in 1982 and amended in late 2003

Summary

Introduction

The amounts paid to shareholders as share repurchases, rather than dividend payments have increased dramatically over the last few decades. Corporate governance theory believed that corporations exist to earn profits for shareholders. Share repurchases were allowed in the United States in1960, but became popular when Rule 10b-18 was passed by Congress in 1982 and amended in late 2003. The S&P 500 dividend payout ratio slid from 55% in 1969 to around 25% in 2013 [1]. In the USA total share buybacks topped the one trillion mark for the first time in 2015 and had exceeded dividend payouts since 2005. In 2014 the value of repurchasing shares in the United States exceeded the value of new shares issued by five times [2]

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