Why do firms decide to stop their share repurchase programs?

Mark Mietzner ()
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Mark Mietzner: Zeppelin University

Review of Managerial Science, 2017, vol. 11, issue 4, No 4, 815-855

Abstract: Abstract We explore the distinguishing characteristics of firms that completed or ended share repurchase programs. Our findings help further understanding of the economic reasons for cancelling such programs. Based on a U.S. sample of 457 completed and 79 non-completed repurchase programs, we find a significant drop in systematic risk around completed buybacks. This suggests a response to deteriorating investment opportunities. In contrast, the systematic risk of non-completers decreases prior to the announcement, followed by an increase that peaks during the event period. This suggests that firms cancel their repurchase intentions when growth options move into the money.

Keywords: Share repurchase; Non-completed buybacks; Free cash flow; Real options; Investment opportunities (search for similar items in EconPapers)
JEL-codes: G14 G30 G32 G35 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11846-016-0206-z

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