Share Repurchase and Controlling Shareholder''s Personal Interest

• Main Authors: Hung-Kun Chen, 陳鴻崑
• Other Authors: Shing-yang Hu
• Format: Others
• Language: en_US
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/98769733464884634572

博士 === 臺灣大學 === 財務金融學研究所 === 98 === This paper differs from the existing literature as it takes into account the possibility that share repurchases are not used to serve for the general shareholders’ interests. When controlling shareholders heavily use their stockholdings as a pledge for personal loans or when their cash flow rights is low, investors do not respond to the announcement of repurchases. This evidence is in favor of a personal interest hypothesis. On the contrary, the market reacts favorably to buyback programs when there are no pledged stocks or when the cash flow rights is high. The evidence is consistent with the signaling hypothesis. Evidence based on operating performances and long-run abnormal return paints the same conclusion.