Deregulating the Volume Limit on Share Repurchases

Adhiraj Sodhi () and Aleksandar Stojanovic
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Adhiraj Sodhi: The Business School, University of Greenwich, London SE10 9LS, UK
Aleksandar Stojanovic: The Business School, University of Greenwich, London SE10 9LS, UK

IJFS, 2024, vol. 12, issue 3, 1-22

Abstract: We empirically advocate for UK regulators to increase the volume limit of 15% outstanding shares on open market repurchases. Our main framework initially tests the determinants of share repurchases based on their size, Small, Medium and Large. The findings reveal that consistent with extant literature, the payout is primarily determined by its capability of distributing excess cash to shareholders and signaling undervaluation. We then check the viability of increasing the volume limit by testing new levels at 2.50% increments, up to 30%. The results indicate that any increase does not broadly change the determinants’ relationship with the payout, rather increased efficiency is realized at every interval, with the 20% and 30% levels being the most favorable.

Keywords: repurchases; volume; deregulation (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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