The real effects of share repurchases

• 成果类型: Article
• 署名作者: Almeida, Heitor; Fos, Vyacheslav; Kronlund, Mathias
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; Boston College
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2015.08.008
• 发表日期: 2016
• 页码: 168-185
• 关键词: SHARE REPURCHASES; EMPLOYMENT; INVESTMENT; regression discontinuity

摘要

We employ a regression discontinuity design to identify the real effects of share repurchases on other firm outcomes. The probability of share repurchases that increase earnings per share (EPS) is sharply higher for firms that would have just missed the EPS forecast in the absence of the repurchase, when compared with firms that just beat the EPS forecast. We use this discontinuity to show that EPS-motivated repurchases are associated with reductions in employment and investment, and a decrease in cash holdings. Our evidence suggests that managers are willing to trade off investments and employment for stock repurchases that allow them to meet analyst EPS forecasts. (C) 2015 Elsevier B.V. All rights reserved.