The Option and Decision to Repurchase Stock

Abstract

Open market repurchase programs provide firms with the flexibility to manage the cash and risk aspects of their operations. This paper therefore aims to determine whether cash and risk matter only at the implementation stage in the sequence of a repurchase program: announcement, implementation, and withdrawal. We do find that temporary cash and risk measures only affect the implementation decision, while partially negating the traditional signaling effect around program announcement. The relevance of the flexibility afforded by the early announcement of a repurchase program is also evidenced by a steadily increasing time-to-event probability of repurchase implementation and program withdrawal.

Option Implied Dividends Predict Dividend Cuts: Evidence from the Financial Crisis

“…For example, in this paper we predict dividend cuts, and announced intentions are executed nearly 100% of the time. Sonika et al () discuss the more complicated share repurchase decision where the time to implement the repurchase program varies and the program is often withdrawn. Forward‐looking market options statistics could be a useful complement to the firm‐specific variables employed and perhaps enhance our ability to explain management's willingness to execute an announced program.…”

Buyback behaviour and the option funding hypothesis

“…Share repurchases have become the dominant means through which firms execute their payout policy, driven primarily by the flexibility inherent in share repurchases, which enables firms to implement open-ended programmes without any commitment (Sonika et al, 2014). This flexibility has an important bearing on how, when and if firm stock options are anti-diluted.…”

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

“…Beta coefficient mengacu pada sebuah indikator yang menunjukkan level risiko saham terhadap risiko pasar. Semakin tinggi beta coefficient, semakin tinggi pembelian kembali saham yang dilakukan perusahaan (Abraham et al, 2018;Sonika, Carline, & Shackleton, 2015). Dengan membeli kembali saham yang beredar, suatu perusahaan sebenarnya telah mendistribusikan kelebihan arus kas yang dimiliki kepada para pemegang saham.…”

“…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.…”

“…Beta coefficient berpengaruh positif terhadap share repurchase dengan nilai koefisien sebesar 0,000137 dan sesuai dengan penelitian sebelumnya (Abraham et al, 2018;Caton et al, 2011;Sonika et al, 2015…”