Such high shareholder payouts might be seen as a threat to banking institutions’ capital strength if profitability faltered. However, we find that the sharp rise in shareholder payouts during 1997 appears to have been driven primarily by increases in net stock repurchases rather than by a run-up in dividend payments. The composition of these payouts is important because banking companies can cu...

Contrary to the implications of many payout theories, we find that announcements of open-market share repurchase programs are not followed by an increase in operating performance. However, we find that repurchasing firms experience a significant reduction in systematic risk and cost of capital relative to non-repurchasing firms. Further, consistent with the free cash-flow hypothesis, we find th...

We examine the practice of share repurchases in UK from 2000 to 2016 find that an important regulatory reform 2003, which relaxed previously strict rules about repurchases, was followed by a significant increase repurchase activity main-market listed firms then motivation for testing several key hypotheses prior literature. Our analysis 6,228 firm years provides support, across both regimes, fr...

Does option-based compensation have a causal influence on payout policy? To address this question we examine the adoption of mandatory expensing of stock options (via accounting standard FAS123R), a plausible exogenous shock to the use of option-based compensation. As FAS123R applies to all firms, our identification strategy exploits the fact that the reduction in option-based compensation in r...

We examine how corporate payout policy is affected by managerial stock incentives using data on more than 1100 nonfinancial firms during 1993-97. We find that management share ownership encourages higher payouts by firms with potentially the greatest agency problems—those with low market-to-book ratios and low management stock ownership. We also find that management stock options change the com...

Article history: Received 18 March 2009 Received in revised form 26 June 2009 Accepted 25 August 2009 Available online 4 November 2009 This study investigates whether prior experience of share repurchases matters in the market reactions to the subsequent repurchase announcements. Specifically, we study the prior record on actual buybacks and post-announcement stock performance. We find that upo...

Share repurchases have come under criticism as they may be used for earnings management and take capital away from productive investment. However, share can also reduce the agency costs of free cash flow offset dilution current shareholders. Whether firms engage in good or manipulative crucially hinge on quality corporate governance. Using UK firm panel data, we study effect independent directo...