Factors influencing on-market share repurchase decisions in Australia

Abstract

Access to this document was granted through an Emerald subscription provided by emerald-srm:198285 [] For AuthorsIf you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this study is to examine factors influencing decisions to repurchase shares on-market in Australia. The present study also examines the role of board size, board independence and chief executive officer duality on the decision to repurchase shares on-market by Australian firms. Design/methodology/approach -This study blends the traditional motivations of share repurchases with the influences of governance. The sample consists of all non-financial firms included in the Australian All Ordinaries Index (AOI) for the period 2004-2010. The repurchase sample consists of 104 repurchases undertaken by 62 firms. A probit panel model is used to analyse the decision to repurchase shares on the market. To account for unobserved heterogeneity, random effects panel models are also used. Findings -Analyses of a sample of non-financial firms included in the AOI for the period 2004-2010show that size is significantly positively correlated with the decision to repurchase shares, thus supporting the agency cost. Findings also support the undervaluation and signalling hypotheses. Similarly, there is evidence in support of the view that firms repurchase shares to reach their target optimal capital structure. The present study also finds a significant positive association between board independence and the decision to repurchase shares in Australia. Research limitations/implications -On-market share repurchases help firms to signal their future growth opportunities and resolve agency conflicts. Signals from repurchases also help markets discover the true fundamental values of firms. Governance plays an important role in improving the effectiveness of on-market share repurchases, as independent directors provide both monitoring and discipline which helps to ensure that firms have valid motivations in undertaking share repurchases. Practical implications -These findings have implications for capital restructuring and governance policies. Principle-based governance frameworks that prevail in countries like Australia work as well as rule-based governance. Originali...

Faktor-Faktor yang Mempengaruhi Share Repurchase Decisions Pada Perusahaan yang Terdaftar di Bursa Efek Indonesia

“…Tidak semua perusahaan bersedia melakukan share repurchase. Perusahaan yang bersedia melakukan share repurchase cenderung merupakan perusahaan yang ukurannya besar (Yarram, 2014).…”

“…Acquisitions mempunyai nilai koefisien sebesar 0,00081 dan nilai probabilita sebesar 0,6018 > 0,05 sehingga disimpulkan bahwa acquisition tidak memiliki pengaruh yang signifikan terhadap share repurchase. Hasil ini sejalan dengan penelitian sebelumnya yang tidak menemukan peran acquisition sebagai faktor yang mempengaruhi perusahaan dalam kebijakan share repurchase (Abraham et al, 2018;Yarram, 2014;Cheng et al, 2015); (Bonaime, 2012) Arus kas perusahaan yang timbul dari aktivitas investasi yang berasal dari akuisisi tidak berpengaruh terhadap keputusan pembelian saham yang dilakukan perusahaan.…”

“…Hasil penelitian ini mendukung penelitian yang menemukan bahwa peningkatan pada depresiasi perusahaan bukanlah faktor pendorong perusahaan untuk melakukan pembelian kembali saham (Abraham et al, 2018;Boudry, Kallberg, & Liu, 2013;Cheng et al, 2015). Nilai koefisien dividen sebesar -0,000113 dan nilai probabilita sebesar 0,8601 menghasilkan kesimpulan tidak ada pengaruh dividen terhadap share repurchase dan sejalan dengan penelitian sebelumnya (Cheng et al, 2015;Sonika et al, 2015;Varma et al, 2018;Yarram, 2014). Pembagian dividen bukan merupakan faktor pendorong perusahaan dalam melakukan pembelian kembali saham.…”

Do Indian Companies Manage Earnings Before Share Repurchase?

“…Signalling of undervaluation is accepted as the most cited reason for buyback all over the world (Bartov, 1991;Comment & Jarrel, 1991;Dann, 1981;Dittmar, 2000;Ikenberry, Lakonishok, & Vermaelen, 1995;Reddy Yarram, 2014;Vermaelen, 1981). All the aforementioned studies measured the intensity of signalling through short-term and long-term returns.…”

Share Repurchases: A Literature Review

“…So the directors should be fair and justified enough at the time of approval of share repurchase. Yarram (2014) examined the relationship between the corporate governance variables and found a positive relationship between board independence and share repurchase decisions. Corporate governance parameters of a company may influence the share repurchase decision.…”