Share Repurchase and Corporate Risk-Taking: Evidence from China

Xinjian Huang, Yingxin Wen and Tao Zeng

Emerging Markets Finance and Trade, 2025, vol. 61, issue 10, 3053-3073

Abstract: We find a negative relation between share repurchases and corporate risk-taking using a sample of Chinese listed companies covering the period of 2014–2022. Our analysis yields consistent evidence even after consideration of endogeneity issues and the conducting of other robustness tests. We find that the impeded effect of share repurchases on corporate risk-taking is more pronounced for Chinese non-state-owned enterprises, firms with low competition in the product market, and firms with poor internal control. The possible mechanisms underlying these dynamics may be that share repurchases reduce corporate capital expenditures and reduce over-investment. Our findings provide important implications for policy- and law-making and are generalizable to other emerging markets.

Date: 2025
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DOI: 10.1080/1540496X.2025.2471882

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