Treasury Stock Research Articles

Corporate social responsibility and firm performance: Evidence from Korea

ABSTRACT This study explores the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) in listed Korean companies over ten years. The results show a significant positive effect of CSR on CFP in the manufacturing sector, but no notable impact in the non-manufacturing sector. A detailed analysis identifies social contribution as the key driver of this positive effect, while the other CSR sub-categories play a minor role. Higher ownership by majority shareholders and treasury stock is associated with lower CSR. This research enhances understanding of the CSR-CFP link in Korea, offering valuable insights for insiders and investors in decision-making.

An Empirical Study on Acquisition, Resale and Retirement of Treasury Stocks: Based on The Corporate Governance Characteristics and ESG Performance

This study presents the results of an empirical analysis of companies listed on the Korean domestic stock market from 2013 to 2021, following the 2011 revision of the Commercial Code. This study investigates how a company's governance structure and ESG activities affect the repurchase, resale, and retirement of treasury stock, and how such actions impact the company's market valuation. The empirical analysis shows that various corporate governance variables, including ownership structure, influence treasury stock-related actions. The impact on company value varies, depending upon the level of corporate governance variables. A company's ESG activities primarily have a positive impact on the repurchase and retirement of treasury stock. Furthermore, our study reveals that when companies with relatively low ESG evaluation ratings repurchase and retire treasury stocks, their value increases. However, the resale of treasury stock had a negative impact on company value for both the high and low ESG evaluation rating groups.

Indirect Acquisition of Treasury Stocks: Problems and Proposed Regulatory Improvements

Indirect Acquisition of Treasury Stocks: Problems and Proposed Regulatory Improvements

Assessment of the Current Taxation System and Legislative Improvement Proposals on Treasury Stock Acquisition and Disposal - With a Focus on Its Relationship with the Commercial Act -

Assessment of the Current Taxation System and Legislative Improvement Proposals on Treasury Stock Acquisition and Disposal - With a Focus on Its Relationship with the Commercial Act -

DETERMINANTS OF CHANGES IN AGRICULTURAL LAND PRICES AT REGIONAL LEVEL IN POLAND

The aim of the research was to identify factors determining changes in land prices and to indicate clusters of Polish voivodeships distinguished according to the adopted variables. Because of the specific features of the agricultural land market in Poland, the performed analyses accounted for the distinction in prices of agricultural land from the Agricultural Property Stock of the State Treasury and from private land trade. In view of the formal and legal regulations implemented in Poland, and the way changes in land prices are recorded, the analysis concerned the time period of 2013-2020, divided into two sub-periods: 2013-2016, and 2017-2020. One of the most significant considerations was the fact that there were two submarkets on the Polish agricultural land market, such as the farmland in private turnover and the farmland from the Agricultural Property Stock of the State Treasury. The highest differentiation of land prices between the voivodeships was due to the average monthly disposal income per capita from a family farm relative to the average monthly income per capita from being self-employed, and the total acreage of farmland sold from the State Treasury Stock.

How did a Previously Unscrupulous Tactic Become a Popular Corporate Strategy?….. Time to Discuss the Impact of an Excise Tax on Treasury Stock

The problematic history of stock buybacks, known more familiarly as Treasury Stock acquisitions, has at times been described as unscrupulous transactions resulting in stock manipulation tactics engaged in by corporate America (Kotter, 1952). However, when the Securities and Exchange Commission (SEC) passed rule 10b-18, the definition of share buybacks changed from problematic manipulative strategies to brilliant corporate maneuvers (SEC Act 1934.). The SEC’s enactment of Rule 10b-18 opened Pandora’s Box for corporations to engage in unfettered access of their own issued stock shares. The 10b-18 SEC Rule provided a pathway for corporations to buyback their own previously sold stock shares within an accepted legal framework. Unfortunately, the SEC Rule 10b-18 has been viewed as sanctioning the use of corporate funds for valueless purchases depleting the liquidity of the corporate balance sheet. But should these transactions, be subject to tax as a means to rectify the problematic buyback mania?

위법한 주식 소각으로 인한 이사의 손해배상책임에 관하여 주주대표소송을 제기할 경우 나타나는 쟁점에 대한 고찰

These cases concerns that liability for damages of director committed illegal stock retirement and the necessity of preceding irrevocable judgment to invalidity of the reduction of capital. Commercial law regulates two ways regarding stock retirement. First way is according to the rules the reduction of capital, second way is only by board resolutions. Conforming to Article 438 of the Commercial Act regarding acquisition of treasury stock and stock retirement is first way. In this case a company can acquire treasury stock without comforming to Article 341 of the Commercial Act, so a company can acquire treasury stock using its funds exceed the dividendable profit. In this case a company have to do special resolution in meeting of stockholders, procedures for Protection of Creditors, Notice of submission of stock certificates etc. If a director violates related regulations regarding invalidity of the reduction in acquisition of treasury stock and stock retirement, he intentionally or negligently violates related regulations and he should be liable for property damages according to Article 399 of the Commercial Act. In this case whole payment for acquisition of treasury stock is a company's suffered amount of property damages. These property damages suffered by payment for acquisition of treasury stock are irrelevant
 to invalidity of the reduction, so liability for damages of director committed illegal stock retirement can be claimable without preceding irrevocable judgment on invalidity of the reduction of capital.
 In second case, because acquisition of treasury stock is not always connected to stock retirement, these two proceedings can be divided. The Commercial Act regarding these two proceedings are separated. Acquisition
 of treasury stock is prescribed by Article 341 of the Commercial Act, on the another hand stock retirement is prescribed by the proviso to Article 343 (1) of the Commercial Act. in this case stock retirement can be done only
 by board resolutions, so stock retirement does not hardly counts. Alternatively it is imporeant whether a company has complied with the Commercial Act in acquisition of treasury stock. If a director violates related regulations in acquisition of treasury stock, he intentionally or negligently violates related regulations and he should be liable for property damages according to Article 399 of the Commercial Act. If a company acquires treasury stock using its funds exceed the dividendable profit, the director who executed this direct should be also liable for property damages according to Article 341 (4) of the Commercial Act.

부패방지를 위한 항공사의 공정거래 규제 방안

Through examples of unfair trade practices and exploitation of private interests by airlines, we tried to derive the Fair Trade Commission's regulatory measures. To this end, the legislation and major requirements for regulating airline companies' unfair trade practices and exploitation of private interests were reviewed, focusing on the illegal cases of Korean Air and Asiana Airlines.
 First, the Fair Trade Act required even subsidiaries to be regulated for unfair trade practices and exploitation of private interests. There have been cases where airlines have evaded regulations on unfair trade practices and exploitation of private interests by establishing subsidiaries through physical division, etc. Accordingly, it is necessary to expand regulations not only to subsidiaries but also to sub-subsidiaries, etc. In this regard, it is necessary to re-examine the internal control system, hold accountability in case of loss of penalty or loss of compensation due to loss of damages, and demand measures to prevent recurrence.
 Second, the 20% standard in the current Fair Trade Act is based on the total number of issued stocks, so companies with a significant number of treasury stocks may be excluded from unfair trade practices and exploitation of profits regardless of the intention of the Fair Trade Commission. Therefore, it is also necessary to consider calculating the share ratio, excluding treasury shares as the standard for issued shares.
 Third, looking at the judgments related to unfair trade practices and exploitation of Korean Air, we come to the conclusion that small-scale unfair trade practices and fraudulent acts cannot be regulated under Article 23-2 of the Fair Trade Act. Therefore, it is necessary to further clarify the concept of unfair profits in the Fair Trade Act with the active attitude of the judiciary.
 Fourth, the current Fair Trade Act does not directly or indirectly hold shares in the same person as in the Kumho Asiana Group, but unfair trade practices and exploitation of private interests by affiliates controlled through public service corporations are not subject to regulation. Therefore, it is necessary to prepare legal measures for ownership stake and actual control.

Why Do Companies Purchase Their Own Stock?

Common theories as to why companies purchase their stock include signaling to the market the stock is selling at a discount, using treasury stock for the issuance of contingent shares, as a substitute for dividends, and increasing earnings per share. These theories are tested by examining the treasury stock transactions from 2016 to 2021 of the 100 largest companies in the S&P 500. Although each of these motivations has merit, the results show that none provides a dominant cause for the purchase of treasury shares. An alternative cause is proposed.

The Moderating Effect of Firm Characteristics on the Relationship between Accounting Conservatism and Treasury Stocks: Evidence from Firms Listed on the Saudi Stock Exchange

The Moderating Effect of Firm Characteristics on the Relationship between Accounting Conservatism and Treasury Stocks: Evidence from Firms Listed on the Saudi Stock Exchange

Achievement of both Growth and Environmental Conservation by Digital Platform Providers

This study explores the achievement of both growth and environmental conservation by digital platform providers, employing financial performance and environmental impact data from six providers in the US and Japan. 1) The regression analyses confirm the Environmental Kuznets Curve (EKC) hypothesis in three combinations of earnings per share (EPS)–electricity consumption or waste generation, treasury stocks–water consumption, and an inverted N-shaped curve in the combination of EPS–Scope 2 CO₂ emissions. 2) The growing trend of Environment, Society, and Governance (ESG)-oriented investment has acted as competitive pressure on the providers for fundraising, especially in spurring them to disclose information. 3) Both increasing EPS to the verified thresholds and ESG-oriented management are deciding factors, and any advanced EPS and ESG-based approaches could contribute toward developing academic frontiers.

SHARE REPURCHASES: ACCOUNTING AND POLICY IMPROVEMENTS

This paper studies the prevalence and financial reporting of share repurchase programs with the goal of offering improvements to the accounting treatment and disclosures, as well as regulatory policies. Analysis of data for the Dow Jones Industrial Average companies from 2018 - 2020 confirms that share repurchases are as widely used as dividends, that debt often funds the buybacks, and that treasury stock represents an average of 43% of assets for the group. Reading the financial statements and notes reveals opportunities to improve completeness and timeliness of related disclosures. In addition to accounting issues surrounding share repurchases, the paper summarizes finance and regulatory concerns. It appears that improved accounting disclosures could address both the accounting and regulatory aspects. Many authors have studied share repurchase programs through a capital finance lens. This paper contributes to the literature by focusing instead on improvements to accounting and disclosures for share repurchases and treasury stock.

CHANGES IN THE AGRICULTURAL LAND MARKET IN POLAND AFTER 2004

The purpose of the article is an attempt to answer the question about the impact of covering agricultural holdings by the CAP instruments as well as the legal and institutional control of agricultural property turnover on the agricultural land market in Poland after 2004. The analysis covers non-market turnover, sale of agricultural land in private trading and from the State Treasury Stock and prices of agricultural land. The source literature, legal regulations and figures from the database of the Ministry of Justice, publications issued by the Statistics Poland, market analyses of the Institute of Agricultural and Food Economics – National Research Institute in Warsaw and the report on the activities of the National Support Centre for Agriculture 2020 were used in the study as the source material. The method of horizontal and vertical comparative analysis was applied to develop the collected material, assessing the given phenomenon in the years and by voivodships. The agricultural land market, both in terms of the number and value of transactions and prices, showed a strong upward trend. These processes, apart from the macroeconomic situation, were influenced by Poland’s accession to the EU and the financial benefits resulting from participation in the Common Agricultural Policy (CAP). Legal regulations referring to the agricultural land market were also an important component. This market is characterized by regional diversification.

Investments and portfolio structure of private pension and insurance companies in North Macedonia

The financial market in general is where supply and demand for funds are met. In other words, funds saved in the financial market are directed to investments in order to contribute to the economy. In the Macedonian financial market, the banking sector is really dominant but also pension funds and insurance funds have an active role. This research will be studied the distribution of pension funds’ portfolios in the North Macedonian financial market. The global financial crisis in 2008 negatively affected the economies and financial markets of many countries, including the USA and Europe, and the effects of the crisis continued until 2013. This negatively affected the confidence in the financial markets, and the current surplus of funds was directed towards low-risk but fixed or low-yield financial instruments. As of 31.12.2018, fund accumulation in private pension funds amounted to 1.04 billion euros, corresponding to approximately 10 percent of GDP. The total premium production of insurance companies is around 157 million euros, while the GDP ratio of premium production is around 1.5 percent. Funds collected in both sectors are generally used in treasury bills, bank deposits, and stocks traded on the Macedonia Stock Exchange and foreign financial markets.

중국경제정책 불확실성의 장기국채 수익률에 대한 영향 분석

The purpose of this study is to analyze how the increase in economic uncertainty affects the flow of funds in the financial market from the perspective of the current time when Chinese economic uncertainty is growing again. More specifically, this study aims to analyze the relationship between treasury bond yield and economic policy uncertainty to assess whether the uncertainty has an impact on the long-term treasury bond through the preference for safe assets. Two possibilities exist. The first is that, with the growth and development of the Chinese financial economy, it has developed substitutability between risky assets represented by stocks, especially long-term treasury stocks and safe assets represented by treasury bonds. The second is that, although China’s bond market is world’s the second or third largest in terms of issued bonds, the transaction volume falls short of this, and participants are limited, resulting in insufficient market supply and transaction with prices not fully reflecting such information. Therefore, this study aims to verify which of these two possibilities is correct through empirical analysis. This study confirms that, although the Chinese bond market is still immature in terms of trading volume and market participation, long-term government bond yields respond due to the preferences for safe assets caused by the increasing economic uncertainty.

Executive Compensation and Company Valuation

In the literature, the integration of the cash and risk effects of executive compensation into company valuation is discussed only marginally. This paper addresses the question of how these effects can be integrated into corporate valuation. Several methods for solving the problem are discussed and a method free of circular references, similar to the adjusted present value approach to company valuation, is identified. Contrary to a common assumption in the literature, there is no uniform and constant cost of capital for a company that uses employee stock options. Cost of capital needs to be adjusted to the cash and risk impact of equity‐based executive compensation. Making recourse to the treasury stock method, which is used to calculate diluted earnings per share, is not recommended here even though a corrected version of this method is used. I discuss different forms of equity‐based executive compensation, including the resulting allocation of risk and net present value between owners and managers.

The Combined Effect of Dividend Policy and Treasury Stock Purchase: Analysis Based on the Dividend Life Cycle Hypothesis and Signal Theory of Treasury Stock Purchase

본 연구의 목적은 배당 수명주기 가설에 기초하여 기업의 배당정책(무배당, 저배당 및 고배당 정책)과 자사주매입의 결합 효과를 분석하는 것이다. 무배당 정책을 사용하면서 자사주를 매입하는 기업은 성장단계에 있는 기업이 자사주매입을 통해 미래 긍정적 성과에 대한 신호를 보내는 것으로 해석할 수 있으므로, 무배당-자사주매입 기업은 자사주매입 이후에 양(+)의 초과수익률이 관측될 것으로 예측하였다. 그러나 배당성향이 영(0)보다 크지만 비교적 낮은 기업에서 자사주를 매입하는 것은 쇠퇴단계에 있는 기업이 자사주매입을 통해 주가를 부양하는 것으로 볼 수 있으므로, 저배당-자사주매입 기업은 자사주매입 이후에 음의 초과수익률을 경험할 것으로 예측하였다. 더불어 고배당-자사주매입 기업은 성숙기에 접어든 회사에서 나타나는 당연한 배당증가로 볼 수 있고, 결과적으로 자사주매입 이후 초과수익률의 변화는 약할 것으로 예측하였다. 이러한 본 연구의 가설을 검증하기 위해 2003년부터 2016년까지 상장기업을 대상으로 자사주를 매입한 집단과 자사주를 매입하지 않은 집단 간에 t+1연도 초과수익률에 차이가 발생하는지를 배당정책별로 각각 조사하였다. 실증분석결과를 요약하면 다음과 같다. 첫째, 자사주를 매입한 기업은 후속연도에 양(+)의 누적초과수익률(1.9%)을 보였다. 특히 다른 매입 사유와 다르게, 자사주를 매입 사유를 주가안정 목적으로 공시한 기업은 자사주매입 이후 양(+)의 초과수익률(6.8%)이 더 크게 관측되었다. 이러한 결과는 주가안정 목적으로 자사주를 매입한 기업의 자사주매입 동기가 경영자의 신호일 가능성을 부분적으로 시사하고 있다. 둘째, 무배당 정책을 사용하고 자사주를 매입한 기업은 후속연도 동안에 양(+)의 누적초과수익률(13.9%)를 보였고, 저배당 정책을 사용하고 자사주를 매입한 기업과 고배당 정책을 사용하고 자사주를 매입한 기업은 후속연도에 긍정적인 주식성과가 관측되지 않았다. 이러한 결과는 성장단계에 들어선 기업의 경영자가 좋은 투자안의 존재를 자사주매입을 통해 시장참여자에게 전달하는 것으로 투자자가 인식하고 있음을 의미한다. 반면에 성숙기(고배당 정책)와 쇠퇴기(저배당 정책)에 접어든 기업의 자사주매입은 투자자들이 긍정적 신호로 인식하지 않고 있음을 보여주고 있다. 전체적으로 본 연구의 결과는 주가안정 목적의 자사주매입 기업은 신호효과가 존재하고, 투자자는 자사주매입의 신호를 수명주기와 연결된 배당정책에 따라 차별적으로 인식하고 있음을 시사하고 있다.

Management Succession in Korea: Tunneling, Semi-Tunneling, and the Reaction of Corporate Law

Recently in Korea, certain issues of corporate law became the subjects of fierce political debates unlike many other jurisdictions where corporate law issues generally remain in the exclusive realm of professionals and academics. This Article begins with the question of why corporate law issues attracted so much political attention in Korea and whether such political attention actually helped improve the corporate law. In pursuing the answers to such questions, this Article identifies a recurring pattern: (i) there are strict rules against seeking private benefits; (ii) managers and controlling shareholders often come up with various clever measures to circumvent such rules; (iii) courts often fail to regulate such circumventing measures because of their conservative and formalistic approach to corporate law; (iv) such passivity of the judiciary leads to many proposals for new statutes in the legislature; (v) because of the complicated sentiments and interests entangled with the chaebols, discussions for statutory amendments often become politicized and lead to suboptimal results; and (vi) the stricter new rules prompt another round of circumvention. This pattern of “rules — circumvention — passive judiciary — stricter statutory rules — further circumvention” is most salient when the controlling shareholders attempt to implement “management succession” (i.e., transferring ownership and managerial power to the descendants of the controlling family). This Article analyzes a few measures widely used in Korea for management succession: issuing stock at a low price, selling treasury stock at a low price, “funneling” of business, “tolling,” and conducting horizontal spin-offs. While some of these measures fall under the typical category of tunneling, some are dubious. By tracking the chain of actions (by the corporations and the controlling family members) and reactions (by the government, including the executive, judiciary, and legislative branches) along the line of the foregoing pattern, this Article shows the importance of the judiciary’s role in corporate law and the limitation of the political lawmaking process in corporate law. The stories involving management succession in Korea also show that the rules, being vulnerable to circumvention, cannot effectively address the corporate governance problems without the concurrent application of the standards.

자기주식 취득거래와 실질과세원칙

The Commercial Act was amended in 2011, and many restrictions on treasury stock transactions were removed. It is desirable that the taxation system for treasury stock transactions changes in accordance with the amendment to treasury stocks of the Commercial Act. Nevertheless, the provisions or the legal principles on the taxation of treasury stock transactions created under the past Commercial Act are still applied.BR One of the representative legal principles that have been applied to treasury stock transactions is substance-over-form taxation principle in determining the type of income of shareholders. The substance-over-form taxation principle is one of the most important theoretical and statutory grounds to regulate tax avoidance.BR The judicial precedents have clarified that dividend income due to capital transactions and capital gains from profit and loss transactions are classified according to the acquisition purpose of the issuing corporation. And the Supreme Court have judged whether a treasury stock transaction is a capital transaction or a profit and loss transaction based on the substance-over-form taxation principle. It is necessary to rethink whether it is appropriate to maintain such a rule under the current Commercial Act. The purpose of this study is to reevaluate past cases applying the substance-over-form taxation principle from the viewpoint of current Commercial Act.BR And the application of the substance-over-form taxation principle to treasury stock transactions is in the area of

기업지배구조 건전화를 위한 자기주식 과다보유 제한의 정합성 검토

기업지배구조 건전화를 위한 자기주식 과다보유 제한의 정합성 검토