Purpose This study examines the determinants and consequences of payout initiation among initial public offering (IPO) firms. We investigate how external and institutional factors, including industry peer behavior, economic policy uncertainty and venture capital involvement, influence post-IPO payout decisions and the choice between dividends and share repurchases. We further analyze the implications of payout initiation for firms' innovation activity and long-term stock performance. Design/methodology/approach Using a sample of 2,003 US IPOs from 2000 to 2020, we employ probit regression models to analyze the determinants of payout initiation, payout choice and magnitude. Cox proportional hazard models are used to examine the timing of first payouts. OLS regression with fixed effects assesses innovation outcomes, while long-term performance is evaluated through calendar-time portfolios based on the Fama-French five-factor model. Findings Payout decisions, including initiation, payout form (dividends versus share repurchases), timing and size, are systematically associated with peer payout behavior, macroeconomic conditions and venture capital backing. We identify significant differences in innovation outcomes and long-term performance across payout types. Firms that initiate dividends experience sharper declines in innovation intensity and more negative long-term abnormal returns than those that initiate repurchases, highlighting important trade-offs among payout commitments, financial flexibility, and growth in the post-IPO period. Research limitations/implications The analysis focuses exclusively on US IPOs, which may limit generalizability to other institutional settings. Innovation is proxied by R&D intensity, which may not fully capture qualitative innovation outcomes. Future research could explore cross-country differences and dynamic adjustments in payout policies over the firm life cycle. Practical implications For managers of newly public firms, the results highlight the trade-off between signaling maturity through payouts and preserving financial flexibility for innovation. Dividend initiation, in particular, may constrain long-term growth. Venture capital investors appear to favor flexibility, influencing payout timing and form. For investors, peer behavior and macroeconomic conditions provide useful signals in anticipating payout decisions and evaluating their long-term implications. Policymakers and market participants should recognize that payout initiation in the post-IPO phase reflects broader strategic positioning rather than merely excess cash distribution. Social implications Payout decisions by IPO firms influence investment in innovation, with broader implications for economic growth, employment, and technological advancement. Commitment-based payouts that reduce innovation intensity may affect long-term productivity and competitiveness. Understanding the conditions under which firms preserve investment capacity versus distribute cash contributes to broader debates about short-termism in public markets. By clarifying how governance structures and macroeconomic uncertainty affect corporate resource allocation, the study informs discussions on sustaining innovation-driven growth in capital markets. Originality/value This study contributes to the literature by simultaneously examining the determinants, innovation effects and long-term performance implications of payout initiation among IPO firms. We present new evidence that peer effects, economic stability, and venture capital involvement all influence the likelihood and the form of payout initiation, and show that the flexibility of share repurchases, compared to dividends, and has significant implications for post-IPO innovation paths and shareholder value creation.

Dividend policy and corporate integrity: Insights from textual analysis of earnings calls

Does directors’ and officers’ liability insurance lend governance credibility? Evidence from share repurchase in Taiwan

Purpose This study aims to investigate how cash holdings and growth opportunities influence market reactions to share repurchase announcements in a high-growth emerging market. We also examine the distinct impact of repurchase modes, specifically fixed-price tender offers and open-market repurchases, on this relationship. Design/methodology/approach We use panel data regression to analyze 371 Indian repurchase announcements from 2013 to 2023. Event study methodology is used to capture the market reactions. Findings We find an overall positive market reaction to share repurchase announcements, with similar initial responses across both modes. Cash-rich firms announcing share repurchases trigger a negative reaction, which turns positive when firms also have higher growth opportunities. However, over time, the market differentiates between repurchase modes, favoring open-market repurchases, particularly by cash-rich firms with lower growth opportunities. Practical implications Our findings help managers strategically align share repurchase decisions, particularly in choosing repurchase modes to enhance market perception. Regulators require firms to disclose the reasons for choosing each repurchase mode, reducing information asymmetry and boosting investor confidence. Investors shall use these insights to optimize decisions and returns. Originality/value This is among the earliest attempts to explore how cash holdings and growth opportunities shape market reactions to repurchases in a high-growth emerging market, contrasting with earlier research on developed countries with more low-growth firms. Unlike many studies focusing on either open-market repurchases or tender offers, we examine both modes collectively and separately, offering a comprehensive perspective.

Share buybacks have become an increasingly popular corporate strategy for distributing surplus cash and signaling managerial confidence. However, empirical evidence on their effectiveness in enhancing shareholder value remains mixed, particularly in emerging markets like India. This study examines the impact of share buyback announcements on stock prices of selected Nifty 50 companies over the period 2019–2024. Using Event Study Methodology, daily stock prices were analyzed for a six-month window before and after buyback announcements. A paired sample t-test was employed to evaluate whether buyback announcements led to statistically significant changes in stock prices. The sample includes 21 buyback events executed through both tender offer and open market routes. The findings reveal that while most buyback announcements resulted in statistically significant price movements, the direction of impact was predominantly negative. Tender offers generally produced stronger market reactions than open market repurchases. A comparative analysis of pre- and post-COVID periods further indicates a more adverse investor response in the post-pandemic phase. The study concludes that share buybacks do not uniformly enhance shareholder value and that market reactions depend on execution method, timing, and broader economic conditions.

We assess what the prevalence of share buybacks can tell us about the relationship between the firm and its stakeholders in an environment in which ownership is increasingly concentrated in the hands of a small number of large asset managers. While the finance literature has put forward several reasons for the current prevalence of buybacks, we posit that without the significant institutional changes outlined in this paper, namely the rise of index investing, these triggers by themselves cannot explain their popularity. We present a game theory model in which three players vie for the cash flow of the company: managers, shareholders, and other stakeholders. We show how in a constellation in which all three players have equal power the expected outcome would be to invest the company’s surplus cash in growth opportunities. This contradicts what is observable in practice: the prevalence of buybacks. We identify ’asset manager capitalism’ as the cause and conclude that changes in the shareholder ownership structure are partly responsible for this. Shareholders have used their increased influence to supervise managers and to shape corporate policy in their favour. This paper adds to the literature on stakeholder theory an understanding of how the relative power of stakeholder groups has changed under asset manager capitalism. We do not, however, seek to take sides in the debate as to whether share buybacks are desirable or not.

Rocksmith Machine Tools: Artificial Intelligence and the Dividend Decision

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Share buyback has become a buzz in the recent corporate world. Numerous research around the world documented a variety of reasons for share buyback. The current research will extend prior research in the area of share buyback by considering the corporate governance characteristics with the traditional motives of buyback. The present paper covers the share buyback activity in India from the financial year 2016 to 2023. The final sample comprises 324 non-financial firms, listed in either the Bombay Stock Exchange or National Stock Exchange. The current study has employed Tobit regression model to ascertain the factor affecting the buyback decision. The findings re-affirm the significance of the undervaluation of the firm and information asymmetry as key determinants of share buyback decisions. Further, results provide strong empirical evidence that board characteristics have an impact on the share buyback decision. Furthermore, the present study captured the significant impact of the COVID-19 crisis on buyback activity. Moreover, the study reported that drivers of share buyback vary according to the type of share repurchase.

Using Company B as a case study, this paper constructs a motivational analysis framework from the behavioral event perspective to examine the true motives behind its share repurchases. Findings reveal that the first repurchase was clearly designed to facilitate major shareholders' share reduction. While the second repurchase implemented an employee stock ownership plan, it also carried the intention of mitigating equity pledge risks. Finally, targeted policy recommendations are proposed based on these findings.

Dividend payout decisions are a cornerstone of financial theory, continuing to pose a significant challenge since the assertion that dividends hold no relevance in perfect capital markets (Miller and Modigliani's,1961). Despite extensive research identifying numerous factors influencing these decisions, no universally applicable framework has materialized, primarily due to the heterogeneous effects of country-specific, company-specific, and market-specific variables. When a company generates net profit, it is confronted with pivotal choices: reinvestment in core operations, dividend disbursement, debt settlement, or share repurchase. The determination of how profits are allocated is of critical importance, as it profoundly impacts the company’s valuation and its long-term financial trajectory. This study aims to investigate the critical determinants influencing profit distribution within Albanian enterprises, utilizing sophisticated regression techniques for rigorous empirical analysis. By leveraging regression models, the research scrutinizes the financial data of Albanian firms from 2018 to 2022. The insights derived from this analysis provides the explainability of factors shaping profit distribution strategies, providing a solid foundation for strategic management and evidence-based decision-making in Albanian businesses. In our research, data sources include financial statements collected from Albanian enterprises by the National Business Center. The results of this research will offer valuable perspectives on profit distribution management within Albanian businesses, enhancing the overall comprehension of the diverse factors that impact financial decision-making processes.

ABSTRACT This study investigates the value relevance of accounting information based on firms’ actions following share repurchases. Although repurchases are used to distribute excess cash and mitigate agency problems, firms in emerging markets like Korea face an important choice after repurchasing shares, as many retain the repurchased shares for later resale rather than retiring them immediately. Using 11,133 firm-year observations, we find that share retirements significantly enhance the value relevance of accounting information compared to non-retiring firms, whereas resales have a contrasting effect. Specifically, we find that investors pay a premium of 164% to book value and 70% to earnings in retiring firms. Conversely, investors discount by 57% on earnings in reselling firms. These results suggest that investors view accounting information as more credible when firms retire shares and less reliable when firms resell them. Our findings offer important implications for markets that allow managerial discretion in post-repurchase actions.

Market perception of any corporate event plays a key role in shaping a firm's value, investment choices, cost of capital, and long-term shareholder value. Share buyback serve as a powerful way to influence market perceptions thereby signaling undervaluation. From the Systematic Literature Review of the of Scopus database we find that there is no such comprehensive work on Indian companies that analyse the impact of share buyback under multiple estimation models for different periods. So, the analysis of the impact of share buyback on stock prices was examined across various dimensions like different estimation models i.e., Market Model, CAPM & Fama French Factor Model during pre, post and pandemic period. As per the thorough analysis of both event days and event windows, we see Market Model estimates are the most conservative, exhibiting fewer significant events and windows whereas Fama French Factor Model appears to provide more robust estimates with consideration to microeconomic factor

Share repurchase and trade credit: evidence from China

This study examines whether environmental, social, and governance (ESG) performance influences corporate share repurchase decisions, using a panel of A-share listed firms in China from 2018 to 2022. The findings show that firms with stronger ESG performance are significantly more likely to conduct share repurchases—particularly genuine (fully executed) buybacks. This relationship is more pronounced among non-state-owned enterprises, during periods of market downturns, in highly competitive industries, and among smaller firms. Mechanism analysis reveals that ESG facilitates repurchase activity by alleviating financing constraints and strengthening equity-based incentives. Furthermore, ESG-aligned repurchases are associated with enhanced R&D investment, improved financial performance, and superior stock market returns. These results highlight the strategic role of ESG in shaping responsible financial policy and provide insights for regulators and policymakers seeking to embed sustainability principles into corporate financial decision-making.

This article reexamines dividend policy as an informational and disciplinary mechanism, articulating three research traditions: (i) the irrelevance view under perfect markets and its limits (Miller & Modigliani, 1961); (ii) signaling in a context of information asymmetry (Bhattacharya, 1979; Miller & Rock, 1985); and (iii) the agency-cost and behavioral finance perspective (Jensen, 1986; Baker & Wurgler, 2016). An integrative three-block model is proposed—earnings quality and persistence; financial discipline and capital structure; market expectations and reference points—to interpret distribution decisions as messages about cash-flow stability, investment discipline, and organizational maturity. The text combines theoretical synthesis and practical implications for boards of directors and institutional investors, detailing operational metrics (e.g., dividend coverage by cash flow, abnormal accruals, and earnings persistence) and boundary conditions (life-cycle stage, intensity in intangibles, and substitution by share repurchases). The article is conceptual (without proprietary data) and dialogues with international and Brazilian evidence up to 2022, outlining a testable empirical agenda in emerging markets. It concludes that consistent payout policies, communicated with transparency, reduce uncertainty, improve governance, and, in environments with frictions, influence the cost of capital and risk perception.

This paper delineates the intellectual framework of share buyback research through a thorough bibliometric analysis. This research utilizes articles indexed in Scopus and employs co-citation, co-authorship, keyword co-occurrence, overlay, and density mapping approaches to identify prevailing topics, prominent authors, institutional networks, and patterns of worldwide collaboration. The findings indicate two principal research streams: a primary cluster based in corporate finance, emphasizing signaling theory, agency issues, governance mechanisms, payout policy, and earnings management; and a secondary cluster originating from operations and supply chain literature, concentrating on buyback contracts and coordination mechanisms. Although they utilize similar language, these streams are theoretically separate, highlighting the transdisciplinary nature of buyback research. The findings indicate that the United States functions as the primary center for academic output and collaboration, with notable contributions from Taiwan, India, France, and Switzerland. This study synthesizes structural trends and theme developments, offering a clear framework for future research that emphasizes prospects for theoretical integration, exploration of developing market situations, and enhancement of cross-disciplinary comprehension of buyback-related phenomena.

Corporate share repurchases and the 2023 excise tax

Purpose Based on a theoretical framework that favors catering theory, this paper aims to determine whether French companies respond to investor demand and preference for share repurchases and dividend payments. Design/methodology/approach The study is based on data from the Thomson Reuters Eikon database and focuses on French companies listed on the CAC All-Tradable index from 2000 to 2023. The study sample comprises 183 companies over 24 years, representing a total of 4,392 observations. The authors employ logistic regression to analyze the impact of independent variables on payout decisions. Findings The study finds evidence that French companies negatively respond to investor demand for dividend payments, share repurchases, and difference premiums. Originality/value To the best of the authors’ knowledge, this study is the first to test catering theory on share repurchase in the French context and to study the catering effect on investor preferences. To do so, the study empirically examines whether the listed French companies react to investor demands and preferences for different forms of compensation, specifically the distribution of dividends and share buybacks.

ABSTRACT This paper examines how Corporate Social Responsibility (CSR) impacts the open market routes (OMRs) share repurchase characteristics, such as repurchase premium, completion rate, and market reaction to announcements in India. This study finds that the Indian market supports the shareholder expense view. Firms highly engaged in CSR are associated with lower repurchase premiums, abnormal returns, and higher completion rates around the announcements. The results are robust to different econometric specifications and address potential endogeneity concerns. This study explores the novel relationship between CSR engagement and repurchase premiums. It highlights the need to foster social trust and strengthen governance to ensure that investors perceive CSR initiatives as credible, value-enhancing signals, thereby avoiding unintended market reactions.