In May 2000 share repurchases were legalized in Sweden, with the purpose to provide companies with an efficient and flexible way to distribute capital. To buy back shares gives companies several benefits which are discussed in our study. The lack of academic research about this topic for Swedish companies gave us an incentive to provide knowledge specifically for this market. When companies announce a share repurchase program they are subject to uncertainty about the society’s reaction and economic consequences. Individuals within a well established organizational field deal rationally with uncertainty by adjusting to their institutional environment. The institutional environment can be defined as an abstract structure of regulations and behavioral norms that guide human’s decisions. This often leads to homogeneity in companies’ culture, structure and output. We ask the question if companies are realizing repurchase programs in a similar way over time, and if share repurchases have been developed as a more common used financial instrument since 2000. Our second question is if companies that decide to buy back shares pursue this under similar economic conditions as a result from becoming homogeneous. The purpose of this study is to describe how institutional pressures in form of coercive, normative and mimetic isomorphism have affected companies’ decision to repurchase shares. We want to explain if there is an upward going trend of share repurchases, a standardized way to repurchase over time and if this decision can be determined by similarities in certain financial indicators of a company’s economic situation. To answer our purpose we used a quantitative research strategy with a deductive approach. The collected data was analyzed in a logistic regression analysis and by interpretations of descriptive statistics. We decided to examine for mimetic isomorphism public companies listed within the industrial sector on Stockholm Stock Exchange from the years 2000-2006. For the test of coercive and normative isomorphism with a logistic regression analysis we had to limit ourselves to investigate the years 2001-2003. In reality the three institutional pressures are working simultaneously and should together lead to a common perception about share repurchases among companies. For our testing we separated institutional isomorphism based on our theoretical preconceptions. This allowed us to analyze each individual institutional pressure and how they interact together. We defined mimetic isomorphism as companies adjusting their repurchase behavior to other companies within the industrial sector. Our result has not shown any indications of such a behavior concerning time, amount or frequency of the buybacks. Testing if certain financial indicators such as excess cash, liquidity, solvency, dividends, volatile operative income, prior year return, growth opportunities, companies’ size, ownership concentration, institutional and individual shareholders could explain stock repurchase activity gave us the possibility to evaluate coercive and normative isomorphism. But the question how institutional isomorphism affects companies’ repurchase decisions still remains unanswered. We have not found any certain financial indicator which motivates companies’ decision to buy back their own shares. The decision might therefore be carried out under very different economic conditions and with different objectives. In the industrial sector and generally in the whole Swedish market only a relatively low proportion of companies buy back shares. The stated findings for the Swedish market imply a need for further investigations over a longer time horizon and for a larger population. Further investigations in this topic which has the potential to provide recent insight into the stock repurchase decision for Swedish companies would enhance and verify our statements.

We examine differences in market performance of Swedish firms that initiate repurchase programs infrequently (1-2 programs), occasionally (3-4 programs) and frequently (5 or more programs) over the period 2000-2009, and examine the relationship between abnormal return and repurchase size in repurchase months. We find that infrequent repurchase programs are greeted with a stronger positive reaction than occasional and frequent programs. However, over long term, infrequent repurchase programs show no abnormal return while occasional and frequent repurchase programs show a significant positive abnormal return. A positive relationship between abnormal return and repurchase size in repurchase months is documented on average for all types of repurchase programs. / <p>QC 20130515</p>

We examine the market liquidity impact of open market share repurchases in a computerized order driven market. Using a detailed dataset of daily repurchase transactions on the Stockholm Stock Exchange together with intraday data on bid-ask spreads and order depths enable us to examine liquidity effects on the actual repurchase days. Overall, we find that repurchase trades inside the order driven trading system contributes to market liquidity through narrower bid-ask spreads and deeper market depths. After controlling for total trading volume, price, and volatility we still find a significant decrease of the bid-ask spread on repurchase days relative to surrounding non-repurchase days. However, repurchases executed as block trades outside the order driven trading system have a detrimental effect on the bid-ask spread, consistent with a negative response to the presence of informed managerial trading. / <p>QC 20130515</p>

This thesis investigates what effects control enhancing mechanisms that are associated with vote differentiation have on dividend payout policy among Swedish listed firms. The data collected for this study is for the period 2005-2007 and the sample consists of 109 companies where 61 of these have shares that are vote differentiated, and the remaining 48 companies have the one share –one vote structure. The variables in the regressions are dividend payout ratio, a dummy for vote differentiation, growth in earnings, size, Tobin’s Q and ownership structure. Three separate hypotheses are applied for reaching a scientific answer to the thesis question. The results indicate that dividend payout policy is significantly negatively affected by the presence of vote differentiation and that vote concentration among the five largest shareholders is generally higher in such firms. The results do also indicate that dividend payout is determined by firm size, growth and investment performance which are in line with earlier studies. From the results, parallels have been drawn between investment performance, ownership concentration, vote differentiation and dividend payout policy. Firms that have vote differentiated shares tend to overinvest instead of paying out dividends when this presumably would be a more appropriate decision considering the aspect of efficiency. As a final conclusion based on the findings, the thesis confirms the argument on that vote differentiating among shares should be reconsidered for better reforms.

This thesis investigates the relationship between share repurchase decisions and severalfinancial variables the year before. We link financial theories such as signaling,substitution, leverage, excess capital, corporate governance, employee stock option, andlegitimacy theory to this relationship and create a hypothesis to test in a quantitative study.This study uses publicly listed firms headquartered in Nordic countries and uses mainlyfinancial data collected between 2015-2019. The study intends to define what factors mayaffect a share repurchase decision and by which degree. This study is also among the firstto test Refinitiv ESG pillar scores toward this relationship. The purpose of this is tounderstand the process better and could potentially allow management to understand betterwhen a share repurchase program can be initiated. It can also better inform stakeholders infirms' decisions on the market in regards to share repurchases. This deductive andquantitative research is based on secondary data gathered from the Eikon financial databaseto create an observational study.We find that share repurchasing firms have more cash flows, lower leverage ratio, morestock options programs, more board members, and fewer independent board members. Wefind that firms with excess cash flows are more likely to undertake a share repurchase eventfrom the regression analysis consistent with the excess cash flow theory. We find arelationship between having a high number of board members, where few are independent,increases the likelihood of a share repurchase event in the following year, which wasagainst our initial corporate governance hypothesis. We found that a higher governancepillar score increases the likelihood of a share repurchases event that shows value tolegitimacy theory but cannot conclusively answer that firms use sustainability disclosure asa tool to legitimize themselves. This result more likely links to corporate governancetheory. We did not find a relation for the undervaluation, substitution, leverage, employeestock options theory. We conclude that firms with more cash flows, lower leverage ratio,more stock options programs, more board members, and fewer independent board membersuse share repurchases more than their counterparts. We note that ESG scores are relativelynew and have seen more widespread use in the latest years.We look forward to reading more research in this field as more data is collected.

本研究利用1970年至2014年之美國公司為樣本探討公司之成長性是否會影響公司之股利政策。實證結果與股利訊號理論相符，公司會利用現金股利之發放降低公司與外部投資者間的資訊不對稱，以達到較低的股東權益成本。然而，當面對較高不確定性時，高成長公司之股東權益成本較高，因此較不會發放股利。本研究亦發現發放股利之高成長公司相較發放股利之低成長公司於未來有較好的營運績效，代表高成長公司發放股利有較好的訊號理論效果。而市場能夠有效率地反應較好的訊號理論於公司股價上。 / The main purpose of this study is to investigate how the corporate growth affects the corporate payout policy. Using U.S. firms during 1970 to 2014 as the sample, we demonstrate that, consistent with signaling hypothesis, firms tend to pay dividends to reduce the information asymmetry, and therefore the cost of equity will be lower. However, considering the higher cost of equity, high growth firms will not pay dividends if they face higher uncertainty. We also find a better future operating performance for high growth firms paying dividends, indicating a good signaling occurs when high growth firms pay dividends. The market is efficient enough to give a price appreciation for those good signaling firms.

In my first chapter, we document and study the use of Rule 10b5 1 preset repurchase plans. We exploit this new and widespread form of payout to examine an issue at the core of payout decisions—the tradeoff between commitment and financial flexibility. Relative to open market repurchases, preset plans provide an expanded repurchase window and increased legal cover, albeit at the cost of reducing repurchase flexibility and the option to time repurchases. These costs and benefits are significantly associated with Rule 10b5-1 adoption. Consistent with preset plans signaling commitment, Rule 10b5-1 repurchase announcements are associated with greater and faster completion rates, with more positive market reactions, and with more dividend substitution than open market repurchases. Lastly, we find that preset repurchase plans represent a unique payout tool whose introduction encouraged a different set of firms to buy back stock and significantly altered the payout landscape. My second chapter examines the strategic use and timing of share repurchases by insiders for personal gain. Using grant level compensation data and a hand-collected sample of monthly repurchases, I find a positive relation between CEO equity sales and share repurchases. I identify the relationship by instrumenting equity sales with equity grant vesting schedules. This relation is persistent across firm characteristics and does not appear to be destroying shareholder value. The results indicate managerial self-interest motivates a subset of share repurchases.

Institutional investors influence corporate payout and research and development (R&D) investment policies. Higher payouts are encouraged by institutional investors, especially in firms with high free cash flow and poor investment opportunities. They also positively influence stock repurchases, particularly in firms with high information asymmetry. The substitution of stock repurchases for dividends as a percentage of total payout is encouraged by institutional investors. Institutional owners persuade firm management to increase research and development (R&D) investment overall and specifically in firms with higher stock liquidity, higher information asymmetry, lower free cash flow, and better investment opportunities. Institutional investors decrease agency costs in payout and R&D investment policy decisions.

Submitted by Cristiano Forti (crforti@gmail.com) on 2013-02-20T17:15:40Z No. of bitstreams: 1 Tese Doutorado 2012 - Versão Final.pdf: 1027415 bytes, checksum: 2fa17755a9aff4536228a46badc3d5f2 (MD5) / Approved for entry into archive by Suzinei Teles Garcia Garcia (suzinei.garcia@fgv.br) on 2013-02-20T17:46:28Z (GMT) No. of bitstreams: 1 Tese Doutorado 2012 - Versão Final.pdf: 1027415 bytes, checksum: 2fa17755a9aff4536228a46badc3d5f2 (MD5) / Made available in DSpace on 2013-02-20T18:30:20Z (GMT). No. of bitstreams: 1 Tese Doutorado 2012 - Versão Final.pdf: 1027415 bytes, checksum: 2fa17755a9aff4536228a46badc3d5f2 (MD5) Previous issue date: 2012-10-24 / This study investigates whether the composition of bank debt affects payout policy. I identify that information-sensitive depositors (Institutional Investors) are targets of dividend signaling by banks. I use a unique database of Brazilian banks, for which I am able to identify several types of debtholders, namely Institutional Investors, nonfinancial firms and individuals, which are potential targets of dividend signaling. I also exploit the features of the Brazilian banking system, such as the existence of several closely held banks, owned and managed by a small group of shareholders, for which shareholder-targeted signaling is implausible, and find that banks that rely more on information-sensitive (institutional) depositors for funding pay larger dividends, controlling for other features. During the financial crisis, this behavior was even more pronounced. This relationship reinforces the role of dividends as a costly and credible signal of the quality of bank assets. I also find that payout is negatively related to the banks’ cost of funding (interest rates paid on certificates of deposits), that dividends have a positive relationship with size and past profitability and that closely held banks pay more dividends than publicly traded banks, a finding that is also in line with the idea that depositors are targets of dividend-signaling. Finally, I find a negative relationship between dividends and the capital adequacy ratio, which indicates that regulatory pressure may induce banks to pay less dividends and that payouts are negatively related to the growth of the loan portfolio, consistent with the idea of banks retaining earnings to increase equity and thus their lending capacity. / Esta tese investiga se a composição do endividamento dos bancos afeta sua política de dividendos. Identificou-se que investidores sensíveis a informações (investidores institucionais) são alvos de sinalização através de dividendos por parte dos bancos. Utilizando uma base de dados exclusiva de bancos brasileiros, foi possível identificar vários tipos de credores, especificamente, investidores institucionais, empresas não financeiras e pessoas físicas, que são alvos potenciais de sinalização por dividendos. Adicionalmente, a existência de vários bancos de capital fechado, controlados e geridos por um pequeno grupo de acionistas, em que a sinalização direcionada a acionistas é implausível, permite inferir que bancos que utilizam mais fundos de investidores sensíveis a informações (institucionais) pagam mais dividendos, controlando por diversas características. Durante a crise financeira, este comportamento foi ainda mais pronunciado. Esta relação reforça o papel dos dividendos como uma forma custosa e crível de comunicar sobre a qualidade dos ativos dos bancos. A hipótese de que os dividendos podem ser utilizados como uma forma de expropriação dos depositantes por parte dos acionistas é refutada, uma vez que, se fosse esse o caso, observar-se-ia esse maiores dividendos em bancos com depositantes menos sensíveis a informação. Além disso, foi verificada uma relação negativa entre o pagamento de dividendos e o custo de captação (juros pagos em certificados de depósito bancário) e uma relação positiva de dividendos com o tamanho e com os lucros passados, e que os bancos de capital fechado pagam mais dividendos do que os de capital aberto, uma descoberta que também se alinha com a ideia de que os depositantes seriam os alvos da sinalização por dividendos. Finalmente, encontrou-se também uma relação negativa entre dividendos e adequação de capital do bancos, o que indica que pressões regulatórias podem induzir os bancos a pagar menos dividendos e que o pagamento de dividendos é negativamente relacionado com o crescimento da carteira de crédito, o que é consistente com a ideia de que os bancos com maiores oportunidades de investimento retêm seus lucros para aumentar seu patrimônio líquido e sua capacidade de conceder crédito.

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