Stewardship code adoption and firms’ decisions on treasury shares: Evidence from South Korea

Jaehyung Bark and Pyung Kyung Kang

Research in International Business and Finance, 2024, vol. 71, issue C

Abstract: This study examines the relationship between institutional blockholders’ stewardship code adoption (the stewardship code adoption) and firms’ treasury-share-related decisions. Using the data of firms listed on the Korea Exchange from 2017 to 2019, this study finds that the stewardship code adoption has a negative relationship with share repurchase and a positive relationship with treasury share cancellation, and that the negative relationship between the stewardship code adoption and share repurchase is more pronounced for institutional blockholders with long-term investment stance. In addition, this study further finds that the stewardship code adoption can affect the timing of firms’ decisions on treasury share cancellation, reducing the risk from long-term holding or opportunistic disposition of treasury shares. The results from this study implies that the increase in shareholder activism triggered by the stewardship code adoption is to enhance shareholder value.

Keywords: Stewardship code; Shareholder activism; Corporate governance; Institutional blockholders; Share repurchase; Treasury share cancellation (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:71:y:2024:i:c:s0275531924002459

DOI: 10.1016/j.ribaf.2024.102452

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