Financial constraints and share repurchases

• 成果类型: Article
• 署名作者: Chen, Sheng-Syan; Wang, Yanzhi
• 署名单位: Yuan Ze University; National Taiwan University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2012.03.003
• 发表日期: 2012
• 页码: 311-331
• 关键词: Share Repurchase; Financial constraint; Corporate liquidity; Managerial hubris

摘要

We examine how the financial constraints of repurchasing firms affect their post-buyback performance. By every constraint measure we use, a set of constrained firms repurchase. They display significantly poorer post-buyback abnormal return and operating performance than unconstrained firms. Financial constraints are more important in explaining the performance of share buybacks for firms with high actual repurchase ratios. Constrained firms, especially those with high actual repurchase ratios, experience a significantly greater increase in post-buyback distress risk than unconstrained firms. Managerial hubris could explain why constrained firms buy back shares even if the buybacks do not improve shareholder wealth. (C) 2012 Elsevier B.V. All rights reserved.