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Share Repurchases in Sweden: The Mimicking Hypothesis

Supkareva, Irina LU (2012) BUSN88 20121
Department of Business Administration
Abstract (Swedish)
I provide evidence that firms send a negative signal on its non-repurchasing industry counterparts. This is consistent with competitive effects. These negative effects are common for mature firms and are sent by the largest repurchasing firm. The market attributes non-repurchasing mature firms as those ones, which do not maximize value for shareholders because managers have excess cash at their disposal. The negative effects do not make a firm to announce share buybacks following its repurchasing rivals. Nevertheless, repurchase announcements cluster for firms with a few investment possibilities. Thus, I do not support the Mimicking Hypothesis among Swedish firms that a decision to repurchase is based on the rival’s share buyback.... (More)
I provide evidence that firms send a negative signal on its non-repurchasing industry counterparts. This is consistent with competitive effects. These negative effects are common for mature firms and are sent by the largest repurchasing firm. The market attributes non-repurchasing mature firms as those ones, which do not maximize value for shareholders because managers have excess cash at their disposal. The negative effects do not make a firm to announce share buybacks following its repurchasing rivals. Nevertheless, repurchase announcements cluster for firms with a few investment possibilities. Thus, I do not support the Mimicking Hypothesis among Swedish firms that a decision to repurchase is based on the rival’s share buyback. Moreover, repurchase announcements of Swedish firms are not affected by the repurchase made by the largest company in an industry. (Less)
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author
Supkareva, Irina LU
supervisor
organization
course
BUSN88 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
intra-industry effects, share repurchases, share buyback determinants, mimicking, competitive, contagion
language
English
id
3095352
date added to LUP
2012-09-25 09:18:16
date last changed
2012-09-25 09:18:16
@misc{3095352,
  abstract     = {I provide evidence that firms send a negative signal on its non-repurchasing industry counterparts. This is consistent with competitive effects. These negative effects are common for mature firms and are sent by the largest repurchasing firm. The market attributes non-repurchasing mature firms as those ones, which do not maximize value for shareholders because managers have excess cash at their disposal. The negative effects do not make a firm to announce share buybacks following its repurchasing rivals. Nevertheless, repurchase announcements cluster for firms with a few investment possibilities. Thus, I do not support the Mimicking Hypothesis among Swedish firms that a decision to repurchase is based on the rival’s share buyback. Moreover, repurchase announcements of Swedish firms are not affected by the repurchase made by the largest company in an industry.},
  author       = {Supkareva, Irina},
  keyword      = {intra-industry effects,share repurchases,share buyback determinants,mimicking,competitive,contagion},
  language     = {eng},
  note         = {Student Paper},
  title        = {Share Repurchases in Sweden: The Mimicking Hypothesis},
  year         = {2012},
}