MANAGEMENT'S VIEW OF STOCK REPURCHASE PROGRAMS

MANAGEMENT'S VIEW OF STOCK REPURCHASE PROGRAMS Since the mid‐1960's companies have been reacquiring their own shares in great numbers. In fact, during the past several years firms seem to have become increasingly aware of the impact that buying back stock can have on meeting corporate objectives and satisfying shareholders. But why do some corporations repurchase their own stock while others do not and what are the causes of the recent increase in stock repurchases? This study attempts to document the reasons underlying the current proliferation of common stock repurchases and to compare the rationale of financial managers with theory. The value of this investigation lies not only in providing an empirical explanation of an important trend but also in investigating the relationship between the theory and practice of stock buybacks. As Levy and Sarnat [9, p. 273] note “the ultimate test of the theory of corporate finance is not its formal elegance but lies in our ability to apply the theoretical concepts to actual business problems.” Hence, the “reality test” of the theory underlying stock repurchases rests with whether the theory is borne out by actual practice. I. Stock Repurchases in Perspective A. Trends in Stock Repurchases Although companies have bought back their stock http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Financial Research Wiley

MANAGEMENT'S VIEW OF STOCK REPURCHASE PROGRAMS

Loading next page...
1
 
/lp/wiley/management-s-view-of-stock-repurchase-programs-aSecKA8Pg9
Publisher
Wiley
Copyright
© The Southern Finance Association and the Southwestern Finance Association
ISSN
0270-2592
eISSN
1475-6803
D.O.I.
10.1111/j.1475-6803.1981.tb00606.x
Publisher site
See Article on Publisher Site

Abstract

Since the mid‐1960's companies have been reacquiring their own shares in great numbers. In fact, during the past several years firms seem to have become increasingly aware of the impact that buying back stock can have on meeting corporate objectives and satisfying shareholders. But why do some corporations repurchase their own stock while others do not and what are the causes of the recent increase in stock repurchases? This study attempts to document the reasons underlying the current proliferation of common stock repurchases and to compare the rationale of financial managers with theory. The value of this investigation lies not only in providing an empirical explanation of an important trend but also in investigating the relationship between the theory and practice of stock buybacks. As Levy and Sarnat [9, p. 273] note “the ultimate test of the theory of corporate finance is not its formal elegance but lies in our ability to apply the theoretical concepts to actual business problems.” Hence, the “reality test” of the theory underlying stock repurchases rests with whether the theory is borne out by actual practice. I. Stock Repurchases in Perspective A. Trends in Stock Repurchases Although companies have bought back their stock

Journal

The Journal of Financial ResearchWiley

Published: Sep 1, 1981

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off