Sacrificing corporate investment for stock repurchases: Are family firms different?
Shane A. VanDalsem
Journal of Economics and Business, 2019, vol. 104, issue C, -
Recent changes to the US tax code have increased stock repurchases by US firms. Critics state and existing research provides evidence that firms forego valuable investment to repurchase stock for short-term stock price increases, benefiting managers whose compensation is closely tied to the firm's stock price. Firms for which the founding family is involved have been shown to have longer horizons regarding investment decisions. This study examines the repurchase and investing behavior of 827 firms for the period 2006 through 2015. The results provide evidence that firms decrease investment in employment and research & development concurrently with stock repurchases. Family firms, however, are less likely to repurchase shares during the period and, when they do, have a lower propensity to decrease investment in capital expenditures, employment, and research & development compared to firms that do not have a founding family presence.
Keywords: Family firms; Repurchases; Corporate investment; Corporate governance (search for similar items in EconPapers)
JEL-codes: G32 G35 M12 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:104:y:2019:i:c:3
Access Statistics for this article
Journal of Economics and Business is currently edited by Kenneth J. Kopecky
More articles in Journal of Economics and Business from Elsevier
Bibliographic data for series maintained by Haili He ().