Abstract
The way companies return cash to their shareholders has changed considerably in recent decades. After changes in the legislation, share repurchases or buybacks have gained prominence. Empirical research regarding share repurchases has mainly focused on the United States and the developed markets of Europe. In this paper, I extend the analysis of share repurchases to a broader set of European countries. I employ random-effect probit panel and dynamic panel models to explain what determines whether a European firm repurchases its shares or not and what influences the repurchased amount. My results suggest that the size and leverage ratio of the firm, as well as its dividend payments, influence both.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Andres, C., Doumet, M., Fernau, E., & Theissen, E. (2015). The Lintner model revisited: Dividends versus total payouts. Journal of Banking & Finance, 55, 56–69.
Andriosopoulos, D., & Hoque, H. (2013). The determinants of share repurchases in Europe. International Review of Financial Analysis, 27(C), 65–76.
Andriosopoulos, D., & Lasfer, M. (2015). The market valuation of share repurchases in Europe. Journal of Banking & Finance, 55(C), 327–339.
Brav, A., Graham, J. R., Harvey, C., & Michaely, R. (2005). Payout policy in the 21st century. Journal of Financial Economics, 77(3), 483–527.
Bundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143.
Easterbrook, F. H. (1984). Two agency-cost explanations of dividends. The American Economic Review, 74(4), 650–659.
Fama, E., & French, K. (2001). Disappearing dividends: Changing firm characteristics or lower propensity to pay? Journal of Financial Economics, 60(1), 3–43.
Farre-Mensa, J., Michaely, R., & Schmalz, M. (2014). Payout Policy. Annual Review of Financial Economics, 6(1), 75–134.
Floyd, E., Li, N., & Skinner, D. J. (2015). Payout policy through the financial crisis: The growth of repurchases and the resilience of dividends. Journal of Financial Economics, 118(2), 299–316.
Grullon, G., & Michaely, R. (2002). Dividends, share repurchases, and the substitution hypothesis. Journal of Finance, 57(4), 1649–1684.
Jensen, M. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323–329.
Lee, C. I., Ejara, D. D., & Gleason, K. C. (2010). An empirical analysis of European stock repurchases. Journal of Multinational Financial Management, 20(2–3), 114–125.
Miller, M., & Rock, K. (1985). Dividend policy under asymmetric information. Journal of Finance, 40(4), 1031–1051.
Ofer, A. R., & Thakor, A. (1987). A theory of stock price responses to alternative corporate cash disbursement methods: Stock repurchases and dividends. Journal of Finance, 42(2), 365–394.
von Eije, H., & Megginson, W. L. (2008). Dividends and share repurchases in the European Union. Journal of Financial Economics, 89(2), 347–374.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Appendix
Appendix
Rights and permissions
Copyright information
© 2022 The Author(s), under exclusive license to Springer Nature Switzerland AG
About this paper
Cite this paper
Szládek, D. (2022). The Analysis of Share Repurchases in European Countries. In: Procházka, D. (eds) Regulation of Finance and Accounting. ACFA ACFA 2021 2020. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-99873-8_11
Download citation
DOI: https://doi.org/10.1007/978-3-030-99873-8_11
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-99872-1
Online ISBN: 978-3-030-99873-8
eBook Packages: Economics and FinanceEconomics and Finance (R0)