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Share Buyback’s Effect on Performance

Eckerberg, Alexander LU (2025) NEKH02 20251
Department of Economics
Abstract (Swedish)
This study examines whether share buybacks lead to real improvements in operational performance for public companies in the Nordic region. Buybacks are frequently associated with mechanical improvements in financial metrics on paper and market signaling, yet how they affect a company’s operational performance has not been clearly established. This is analyzed by comparing companies that conducted share buybacks in 2017 with a matched control group using a difference-in-difference regression. The operational performance is measured using three different performance metrics: EBITDA margin, net income margin, revenue growth and is measured from 2015 to 2020. The analysis finds no consistent or statistically significant effect of buybacks on... (More)
This study examines whether share buybacks lead to real improvements in operational performance for public companies in the Nordic region. Buybacks are frequently associated with mechanical improvements in financial metrics on paper and market signaling, yet how they affect a company’s operational performance has not been clearly established. This is analyzed by comparing companies that conducted share buybacks in 2017 with a matched control group using a difference-in-difference regression. The operational performance is measured using three different performance metrics: EBITDA margin, net income margin, revenue growth and is measured from 2015 to 2020. The analysis finds no consistent or statistically significant effect of buybacks on any of the measured performance metrics. One single significant decline in net income margin is found in 2019, but this does not reflect any broader trend or systematic effect. It is concluded that the effects of share buybacks likely are limited to mechanical financial changes and do not drive any improvements in operational performance. (Less)
Please use this url to cite or link to this publication:
author
Eckerberg, Alexander LU
supervisor
organization
course
NEKH02 20251
year
type
M2 - Bachelor Degree
subject
keywords
Share Repurchases, Buybacks, Finance, Market Behavior.
language
English
id
9212044
date added to LUP
2025-09-12 09:15:27
date last changed
2025-09-12 09:15:27
@misc{9212044,
  abstract     = {{This study examines whether share buybacks lead to real improvements in operational performance for public companies in the Nordic region. Buybacks are frequently associated with mechanical improvements in financial metrics on paper and market signaling, yet how they affect a company’s operational performance has not been clearly established. This is analyzed by comparing companies that conducted share buybacks in 2017 with a matched control group using a difference-in-difference regression. The operational performance is measured using three different performance metrics: EBITDA margin, net income margin, revenue growth and is measured from 2015 to 2020. The analysis finds no consistent or statistically significant effect of buybacks on any of the measured performance metrics. One single significant decline in net income margin is found in 2019, but this does not reflect any broader trend or systematic effect. It is concluded that the effects of share buybacks likely are limited to mechanical financial changes and do not drive any improvements in operational performance.}},
  author       = {{Eckerberg, Alexander}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Share Buyback’s Effect on Performance}},
  year         = {{2025}},
}