Share Repurchases and Corporate Sustainability: Evidence from South Africa

Frank Mouton, Carly Londt, Gerhard Cloete, Wynand Hattingh and Gretha Steenkamp ()
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Frank Mouton: School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa
Carly Londt: School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa
Gerhard Cloete: School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa
Wynand Hattingh: School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa
Gretha Steenkamp: School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa

IJFS, 2024, vol. 12, issue 2, 1-15

Abstract: This study examined the relationship between share repurchases and corporate sustainability in South Africa during 2011–2019. According to stakeholder theory, companies may feel a sense of obligation to not only distribute returns to shareholders through share repurchases but also to other stakeholders by investing in environmental, social or governance (ESG)-related projects. Our study, the first of its kind in the context of an emerging economy, reported a positive relationship between share repurchases and corporate sustainability in South Africa (proxied using ESG scores)—specifically social scores. The emphasis on the social, rather than the environmental, dimensions of ESG might result from the emerging economy context, where several societal problems are experienced. The results support stakeholder theory, but increased disclosure pertaining to the social dimension of ESG in years when share repurchases are executed might also provide evidence of ‘social washing’ (when companies employ their integrated report disclosures to paint an overly positive picture of their social responsibility initiatives).

Keywords: share repurchases; corporate sustainability; ESG; social scores; stakeholder theory; social washing (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2024
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