Stock Repurchases Research Articles

Investment Decision among Intercontinental, Hilton and Louis Vuitton

Investment is very important for both individuals and the economy and society. A good investment can achieve wealth growth or create more social welfare. In this context, the main purpose of this article is to study how different investors invest in Hilton, Intercontinental, and Louis Vuitton to achieve their investment objectives. This article will first introduce three companies. In addition, this study collected indicator data on risk, profit margin, and market ratio from multiple perspectives, and after comprehensive calculations, formed the analytical basis for this study. On the basis of data, this article summarizes the asset selection of value investors, income investors, PEG investors, index investors, ROA investors, DCF investors, momentum investors, insider trading, and stock repurchases. The results show that there are significant differences in the preferences of different investors towards the three companies.

How Investors Choose Assets Among Pfizer, Walgreens, and CVS

Investment is one of the most important economic activities, and a reasonable investment method can help investors continuously obtain stable returns and complete the process of wealth accumulation. The healthcare industry, as a technology and capital-intensive industry, has always been a favored area for investors. This study selected three companies, Pfizer, Walgreens, and CVS, and analyzed financial data from different perspectives, including risk, profitability, and market ratio; Based on these data, this study determined the investment preferences of several types of investors in three companies, and the results showed that value and return investors would invest in Pfizer and Walgreens, while stock repurchase investors would invest in CVS. The analysis in this article is crucial for helping people determine which type of stock to invest in, thereby improving their chances of outperforming the market.

Comparative Analysis of Three Semiconductor Technology Companies

This paper presents a meticulous financial analysis of Nvidia, Intel, and Texas Instruments, three leading companies in the semiconductor industry. And these three companies also operate in different section in the semiconductor industry. The study aims to provide insights into effective investment strategies of these companies. The investigation encompasses an analysis of recent financial indicators for these companies like exploring the meaning of various data, along with an exploration of asset selection challenges faced by nine distinct investor profiles including Value, Income, PEG, Index, Ratio analysis, DCF, Momentum, Insider buying and Stock buyback investors. Leveraging established financial models, the research reveals that Index, Momentum, Insider Buying, and Stock Buyback investors are inclined to invest in all three stocks. Additionally, Ratio Analysis and Discounted Cash Flow (DCF) investors are inclined towards investing Texas Instruments. The insights gained from this analysis contribute to the development of tailored investment strategies, ultimately aiming to optimize financial gains within the semiconductor sector.

Controlling shareholders' share pledge and share repurchase notices of listed companies.

States encourage listed companies to use stock repurchase to elevate the market value of listed firms. After China's promulgation of the new Company Law in 2018, the number of listed companies that issued stock repurchase notices has increased, and the frequency is also increasing. But whether market value management is the real incentive for the action remains debatable. To reduce the risk of pledges, controlling shareholders may use stock repurchases to maintain the security of control rights, and stock repurchase notice may become a tool for controlling shareholders to manage pledge risks. From the perspective of pledge risk management, this paper selects the listed companies from 2012 to 2019 and finds that the share pledge of the controlling shareholder affects the stock repurchase behavior of listed companies by affecting the current pledge risk and the quality of information disclosure plays the interactive role between the two.

The Timing of Stock Repurchases: Do Well-Connected CEOs Help or Harm? 

The Timing of Stock Repurchases: Do Well-Connected CEOs Help or Harm? 

Why do undervalued firms repurchase shares? Evidence based on the market-timing effect in China

It is puzzling that few undervalued firms in China make repurchase announcements despite the value-adding motive of share repurchases. Inspired by this conundrum, this study explores the market-timing effect of repurchase signaling. Our sample consists of A-share listed firms that made stock repurchase announcements in China between 2005 and 2019, as well as their comparable peers obtained through the Mahalanobis distance matching. Changes in market indices before and after the repurchase announcements are used to measure overall market timing, followed by regression analyses. We find a positive relationship between post-announcement price reactions and market performance measures, suggesting that firms time repurchase announcements based on historical pricing information as well as overall market trends. We further propose that firms' timing capabilities are honed through attention to the capital market, which significantly increases the willingness to announce repurchase plans. Our findings help to explain why firms in China with undervalued shares make repurchase announcements.

Share repurchase and capital market pricing efficiency

Share repurchase has become essential to distribute dividends, optimize long-term incentive mechanisms and improve governance structure. This paper selects the sample data from 2007 to 2021 to investigate stock repurchase in promoting the pricing efficiency. Stock repurchase can reduce the synchronicity. The mechanism test points out that stock repurchase plays an inhibitory role by improving stock liquidity and the quality of information disclosure. The heterogeneity test shows that the mechanisms are significant in state-owned enterprises and enterprises with low internal and external governance efficiency due to the substitution effect of stock repurchase on governance to a certain extent.

Stock Repurchase and Stock Price Crash Risk

This paper selects the data of A-share listed companies in 2021–2021 to investigate the impact of stock repurchase on stock price crash risk. It is found that the implementation of stock repurchase by listed companies can indeed curb the risk of stock price crash; stock repurchase reduces the risk of stock price crash by improving the investor sentiment of individual stocks; and stock repurchase reduces the risk of stock price crash by increasing the information transparency.

Retracted: Study on Announcement Effect of Stock Repurchase from the Perspective of Configuration Analysis

Retracted: Study on Announcement Effect of Stock Repurchase from the Perspective of Configuration Analysis

Stock Investment Value Analysis Based on Sports Brand Section

This article briefly analyzes the risks, profitability, and market ratios of the stocks of three sportswear brands and gives investment advice for different types of investors. Lululemon, Nike, and VF Corporation are three sports industry brands. First, none of the three stocks are value stocks. Because of its better upward momentum, Lululemon would be a satisfying choice for momentum investors. Due to its insider buying of more than 4% and its highest ROA among them, Lululemon is also the best choice for insider buying and ratio analysis investors. Due to its PEG ratio of less than 1, dividend yield greater than 6, and DCF valuation higher than the current stock price, VF Corporation is popular with PEG, income, and DCF investors. NIKE has a stock buyback of more than 1B USD, which is the highest among the 3 stocks, so stock buyback investors are more inclined to invest in it. Lululemon and NIKE have market caps higher than 15B USD, so they have less size risk, which makes them more favored by index investors.

Does Debt Influence Earnings Management in Going Private Transactions in Brazil?

This paper aimed to analyze the influence of debt in earnings management of non-financial companies that were listed on the Brazilian capital market and went private by stock repurchase between 2002 and 2020. The companies that went private were matched by size and sector of activity with those that remained on the stock exchange market in the year prior to the offer announcement. Earnings management was estimated using discretionary accruals and debt was measured by Debt-to-Equity ratio and Total Debt ratio. The results suggest that companies that went public by repurchasing shares tend present negative earnings management. Also, it was found negative and significant relationship between earnings management and Debt-to-Equity ratio and company size. It is understood that the intensification of the monitoring of the managers' actions, mainly due to the publicity of the process implies the restriction of discretionary practices.

Sick with “shareholder value”: US pharma’s financialized business model during the pandemic

US-based pharmaceutical companies claim that they need high drug prices to provide sufficient profits to fund investments in innovation. This argument is consistent with the corporate-finance principle of retaining profits and reinvesting in productive capabilities that is central to our “theory of innovative enterprise” (TIE). The problem is that, for decades, resource allocation at the largest US-based pharmaceutical companies, known as “Big Pharma,” has embraced the agency-theory argument that a company should be run to “maximize shareholder value” (MSV). We use TIE to expose MSV as an ideology of “predatory value extraction” (PVE), which legitimizes price gouging, downsizing the labor force, and tax dodging. In the body of the article, we document that the largest US-based pharmaceutical companies have become highly financialized, using all their profits, and often more, to distribute cash dividends and stock buybacks to shareholders. We then show the extent to which stock-based remuneration incentivizes senior pharmaceutical executives to engage in this financialized behavior. As cases in point, we consider the financialization of the two US-based companies, Pfizer and Moderna, that were centrally involved in the delivery of COVID-19 mRNA vaccines during the SARS-CoV-2 pandemic. We conclude our analysis by placing PVE in the US pharmaceutical industry in the broader context of the US healthcare system and the US economy.

MISLEADING OR BENEFICIAL? ASSESSING THE EXPLOITATION POTENTIAL OF STOCK BUYBACK ANNOUNCEMENTS IN THE MALAYSIAN STOCK MARKET

In the traditional sense, stock buyback announcements are generally perceived as advantageous news. However, with the evolution of the capital market, some scholars argue that such declarations possess the potential for exploitation as a means to artificially inflate stock prices, thereby deceiving investors. Consequently, within the framework of the Efficient Market Hypothesis and the Theory of Asymmetric Information, we employed an event study approach to empirically investigate 30 listed companies in Malaysia that announced stock buybacks in the before June 2022. To fortify the robustness of our research findings, we employed Market Model and the Fama-French Three-Factor Model to estimate Average Abnormal Returns and Cumulative Average Abnormal Returns. The outcomes indicate that stock buyback announcements are still regarded as favorable news in the Malaysian stock market, bestowing investors with significant positive average cumulative abnormal returns. Nevertheless, the Malaysian capital market may witness premature leakage of stock buyback information, thereby accentuating the existence of information asymmetry. We contend that corporate leadership can harness stock buyback announcements as a mechanism to stabilize stock prices and infuse confidence in investors. Concurrently, market regulators should augment transparency and regulatory measures to ensure fairness among all market participants.

Estimating the Growth Rate from Historical Data for Firms that Repurchase Stock

One of the most important steps in a discounted cash flow valuation of a firm is the estimation of g, the long-term growth rate. This is commonly estimated by calculating g as the addition to retained earnings divided by beginning common equity. A serious problem can occur if the firm has participated in a stock buyback because buying back stock deflates the denominator. The financial statements record the historical value of the firm’s stock. Our purpose here is to present to students the distortion that can occur when firms repurchase their stock and a simple adjustment process to illustrate the reasonableness of a growth estimate.

Made in America: International Tax Reform 2.0 – Part 3

This is Part 3 of the author’s article, “Made in America: International Tax Reform 2.0”. It first considers the Inflation Reduction Act of 2022, followed by an exploration of the new Corporate Alternative Minimum Tax based on information available as of 5 February 2023, the date this article was written. It then deals with the Excise Tax on Repurchases of Corporate Stock.

CEO Regulatory Focus and Stock Buybacks: The Moderating Effect of CEO Tenure and Restricted Stock

CEO Regulatory Focus and Stock Buybacks: The Moderating Effect of CEO Tenure and Restricted Stock

An Event Study on the Response of Stock Returns to Repurchase of Stock News

This study investigates how stock returns respond to news of stock repurchases. The objective isto ascertain market reaction and pricing adjustment (response) to the announcement of stockrepurchase at Pakistan Stock exchange. As chosen by many researchers in this field, an estimationperiod of 120 days and a test period of 11 days has been selected, daily price data from sevenbusinesses (listed on the PSX) that announced stock repurchases between May 2022 and February2023 along with corresponding PSX index values were used. Utilizing the data from the estimationperiod and using OLS (ordinary least squares) market model, normal(Expected) returns werederived. The null hypothesis “Stock repurchase does not have any relationship with abnormalreturn is rejected, as a result of the test statistics showing a significant relationship between eventstock repurchases and abnormal returns.

The effect of asymmetric information disappears: Evidence in share repurchases and market efficiency

This article aims to measure the wealth effect centered on stock repurchase announcements in U.S. companies and combine it with the concept of market efficiency, which means that information can be fully disclosed and circulated. We find that the higher the market efficiency, the lower the information asymmetry between internal managers and external investors and the lower the company opacity, resulting in the disappearance of abnormal returns after stock repurchases. Furthermore, we show that when market uncertainty decreases, the lower the information asymmetry opacity, the lower the abnormal returns after stock repurchases. Our findings have important policy implications for governments and investors.

Stock Liquidity and Cash Holdings: Evidence from Stock Buybacks

In view of the traditional view that stock liquidity reduces the cash holding level of listed companies by alleviating financing constraints and restraining agency costs, this paper starts from the company's stock repurchase motivation and finds that high stock liquidity may strengthen the company's stock repurchase motivation and thus promote the company to improve its cash holding level. Based on the empirical evidence of Chinese A-share listed companies from 2011 to 2021, it is shown that stock liquidity can significantly increase the company's cash holdings, and through the relaxation of the buyback policy in 2018 as an exogenous shock, it is verified by the differential difference method that after the relaxation of the policy, the company with high stock liquidity will increase more cash holdings than the company with low stock liquidity. Further research shows that the property rights of listed companies and the heterogeneity of the characteristics of senior executives will affect the promoting effect of stock liquidity on cash holdings.

Formulating a Dividend Policy for a Firm

This study seeks to identify key factors in formulating a dividend policy for a firm. We revisit the theory of stock valuation and identify and explore the impact of critical factors on a firm’s dividend policy. Next, we develop a framework and investigate financial data requirements to formulate such a policy and illustrate a methodology with an example of a case study for a firm which had never paid dividends but plans to change its policy. We recommend further research into issues in development and implementation of a firm’s stock repurchase plan in lieu of or to complement a dividend policy.