Treasury Shares Research Articles

Regulation of Treasury Shares in Kuwaiti Law: A Comparative Study

Treasury shares have a significant role in companies and capital markets’ regulations. As a result, it gained the attention of legislators and legal scholars. This paper examines the regulatory rules regarding treasury shares in Kuwaiti law, its philosophy, and practicality. The paper adopts a comparative, analytical approach addressing the historical evolution of treasury shares and comparing related regulations and legal provisions in many jurisdictions. With comparative law at hand, this paper aims to thoroughly examine the concept of treasure shares and their legal nature, their characteristics, buy-back procedures, treasury shares’ relation with the company’s capital structure, and ultimately, the uses of treasury shares. By analyzing Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and Law No. 1 of 2016 Regarding Companies Law and by incorporating comparative law such as Swiss, German, Swedish, Danish and other laws, this study demonstrates different matters related to treasury shares that are not yet regulated in Kuwait. The research assesses the legal provisions governing treasury shares, addressing matters such as shareholder rights, voting power, and market manipulation concerns. It argues for regulatory reform to further enhance the provisions governing treasury shares. As a result of the analysis given, recommendations are provided to enhance the regulatory framework in Kuwait.

Understanding Corporate Strategic Actions in Acquiring Treasury Shares: Application of Clustering Method

Understanding Corporate Strategic Actions in Acquiring Treasury Shares: Application of Clustering Method

Motivation and Long-term Performance of Acquisition and Resale of Treasury Shares

Motivation and Long-term Performance of Acquisition and Resale of Treasury Shares

Factors Affecting the Resale of Treasury Shares in Malaysia

Factors Affecting the Resale of Treasury Shares in Malaysia

Effect of Treasury Shares on Firm Value: Evidence from Korea

This study examines how treasury shares held by Korea’s publicly traded firms may affect firm value. Unlike in the U.S., where repurchased shares are immediately subtracted from market capitalization, and thus, constitute a genuine payout mechanism, Korean stock market practice retains the value of repurchased shares in market capitalization, effectively treating treasury shares as a form of an asset. Korean investors do not consider share repurchase as a payout mechanism until the repurchased shares are formally cancelled. We find that share repurchases are followed by positive market reactions, which is consistent with the results of previous research, but the reactions are even larger on the cancellation disclosure date. More importantly, firms with larger treasury shares in stock exhibit a 24% lower Tobin’s q compared to those firms with smaller treasury shares. These findings suggest that the market anticipates that treasury shares may be used as a potential antitakeover measure at a later date, which is reflected in the current market value.

New Regime: A Review of the Minimum Issued Share Capital and Treasury Shares under CAMA, 2020.

New Regime: A Review of the Minimum Issued Share Capital and Treasury Shares under CAMA, 2020.

Effect of Including Treasury Shares in Market Capitalization, EPS, and PER: Evidence from Korea

Market capitalization (cap) is typically determined by multiplying price per share by the number of outstanding shares, excluding treasury shares. Nevertheless, a common practice in Korea has been, and still is, to include treasury shares in market cap. Such practice not only inherently overstates the true magnitude of the market cap by the amount of repurchased shares but also distorts earnings per share (EPS), price earnings ratio (PER), and other per share indicators or price multiples. This study is the first to examine how the practice of including treasury shares affects market cap and other indicators. Our results suggest that the reported market cap is overstated by roughly 6% on average in the Korean capital market. EPS is understated by 3.6%, and PER is overstated by 4.2%. We also recreate 5x5 test portfolios based on the Fama-French three factor model after appropriately excluding treasury shares, and find that up to 20% of constituent stocks may be different for certain test portfolios. These results suggest that Korean academics and practitioners should seriously reconsider the current practice of including treasury shares in calculating market cap and start excluding them to be more consistent with the theory and international practice.

자사주 처분과 내부자거래

자사주 처분과 내부자거래

기업의 지배구조와 자기주식소각과의 관련성에 대한 연구

[연구목적] 본 연구에서는 기업들의 자기주식소각 활동과 기업지배구조 간에 어떠한 관련성이 있는지를 실증적으로 분석하였다.BR [연구방법] 본 연구의 분석대상은 2010년부터 2016년까지 유가증권 시장 및 코스닥 시장에 상장되어있는 기업이며, KIND에서 자기주식 소각 현황 자료를 추출했다. 기업지배구조 변수로는 최대주주 및 특수관계인의 보통주 지분율을 반영한 최대주주지분율과 외국인지분율, 이사회 크기 및 사외이사비율을 사용하여 회귀분석을 시행하였다.BR [연구결과] 실증분석결과는 다음과 같다. 첫째, 최대주주지분율과 자사주 소각 여부는 유의한 양(＋)의 관계를 보였으며, 외국인지분율과 자사주 소각 여부는 유의한 음(－)의 관계가 나타났다. 또한 사외이사비율과 자사주 소각 여부도 유의한 음(－)의 관계가 있는 것으로 나타났다. 둘째, 자사주 소각 규모와 최대주주지분율은 유의한 양(＋)의 관계를 보였으며, 외국인지분율과 자사주 소각 규모는 유의한 음(－)의 관계를 갖는 것으로 나타났다. 사외이사비율과 자사주 소각 규모도 유의한 음(－)의 관계가 나타났다. 소각 여부와 마찬가지로 소각 규모에서도 최대주주지분율이 높은 기업은 소각 규모가 큰 경향이 있으며, 외국인지분율이 높거나 혹은 사외이사비율이 높으면 자사주 소각 규모가 작은 경향이 있음을 알 수 있었다.BR [연구의 시사점] 본 논문은 보다 확장된 표본을 바탕으로 하여 기업지배구조와 자기주식소각의 관련성에 대한 새로운 결과를 제시하였다는 점에서 의미가 있다. 나아가, 자사주 소각활동을 기업지배구조의 수준과 연관 지어 볼 수 있는 관점을 제시했다는 점에서 그 의의가 있다.

기업구조조정과 자기주식의 쟁점 및 입법적 개선방안

기업구조조정과 자기주식의 쟁점 및 입법적 개선방안

한국 기업의 자사주 처분 및 소각에 관한 실증 연구

한국 기업의 자사주 처분 및 소각에 관한 실증 연구

Financial Characteristics and Cancelling Treasury Shares Events

Background/Objectives: This study explores the incidence of cancelling treasury shares events in Malaysia and examines the financial characteristics of companies that are more likely to cancel their shares. Methods/Statistical Analysis: The study utilizes descriptive analysis to assess the incidence of cancelling treasury share events among non-financial and nonutility Malaysian companies. Tobit regression analysis is used to gauge the relationship between firm financial characteristics and the incidence of cancelling treasury share events. Findings: There were a total of 175 events of cancelling treasury shares occurred between the years 2001 and 2012. This study finds that profitability positively and significantly affects the decision to cancel treasury shares, while excess cash flows negatively influence a firm’s decision to cancel treasury shares. Furthermore, smaller size companies are more likely to engage in cancelling their shares. Application/Improvements: The study finds that smaller firms are more likely to cancel their treasury shares as these companies may have severe information asymmetry problems.

Regulation on Disposal of Treasury Shares -Analysis of the Seoul Central District Court Decision 2015Kahap80597 delivered on July 7, 2015 and Seoul High Court Decision 2015Ra20503 delivered on July 16, 2015-

Regulation on Disposal of Treasury Shares -Analysis of the Seoul Central District Court Decision 2015Kahap80597 delivered on July 7, 2015 and Seoul High Court Decision 2015Ra20503 delivered on July 16, 2015-

Put Your Money Where Your Mouth is: Treasury Shares as Currency

This paper examines the historical question of whether treasury shares and newly issued shares are equivalent by considering their use in stock based M&A transactions. We quantify the differential market response to M&A announcements when bidders have sufficient currency in the form of cash or treasury shares to execute the deal versus bidders with insufficient currency. We confirm prior findings of a nonnegative market reaction to cash mergers of public targets and determine that this finding holds irrespective of the sufficiency of their currency on hand. In addition, we find that the presence of sufficient currency at the date of a stock M&A announcement leads to a significantly more favorable market reaction for public targets. Our results demonstrate that the legal equivalency of treasury and newly issued shares does not extend to these forms of currencies being economically equivalent.

Using Treasury 'Repurchase' Shares to Stabilize Stock Markets

This paper aims to examine one of the most important issues in the international corporate laws, which is the issue of share repurchases known as treasury shares. This paper investigated corporate laws, stock exchange regulations, research literatures and stock trading volume for repurchase activities, covering a sample of thirty-five countries developed and emerging markets. The study found that there is an increasing movement in the world stock market towards adopting or deregulating the share repurchase activities, More than half of the selected sample witnessed a change in the related laws (especially corporate laws) of share repurchases during the period 1995 to 2000. Moreover, there is a toleration to use the treasury share in enhancing the stock market during stock crises and extraordinary market price volatility. Based on upon findings, a model has been suggested and articulated to be considered as a stabilization instrument for stock marketing.

Accounting for Treasury Shares under the Model Business Corporation Act

Accounting for Treasury Shares under the Model Business Corporation Act

The Curious Fiction of Treasury Shares

NJ AN able series of articles on the California Corporate Securities Act', Mr. Dahlquist takes polite issue with the view of the writer that the so-called sale of stock by a corporation is in reality the issue of a new security. The controversy over this point suggests the need of a discussion on principle of the peculiar metaphysical fiction of the law as to treasury shares,2 which often puzzles the accountant and facilitates certain financial abuses.

The Curious Fiction of Treasury Shares

The Curious Fiction of Treasury Shares

The Legal Status of Treasury Shares

The Legal Status of Treasury Shares

Corporations: Pre-Emptive Rights in Treasury Shares

Corporations: Pre-Emptive Rights in Treasury Shares