Do Strategic Share Repurchase Programs Create Long-Run Firm Value

The findings in the paper do not support the theories that share repurchase programs are related to management signaling an increase in a firm's long-run performance in the market. Contrary to the hypothesized relationships, mean values of Tobin's Q were found to be slightly higher in the non-repurchasing group of companies. Non-Repurchasing firms also show lower B/M measures. The results indicate that the long-term rates of growth are higher for firm's not implementing a share repurchase strategy vis-a-vis firms using a share repurchase strategy. Additionally, in measuring the relationship between the growth in firm value and the performance of the free cash flow components, the regression results found that the growth in the value of non-repurchasing firms was related to the contribution of net working capital and capital investment. It also found that net operating flows were not closely related to the growth in firm value. There is, however, significant improvement in the growth in firm value of repurchasing firms in the period immediately following the initiation of a share repurchase program. This higher level of growth in firm value is not sustained in the long-term. The implementation of a repurchasing strategy is, in itself, not a panacea guaranteeing future wealth creation.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Finance

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2015

Author dc:creator

• Evans, John Philip

Contributors dc:contributor

• James Gentry

• Business Administration, General

Language dc:language

eng

Identifier

(MiAaPQ)AAI9904449

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/87445