In search of stock repurchases determinants in listed Indonesian firms during regulatory changes

Moin, Abdul, Guney, Yilmaz and El Kalak, Izidin ORCID: https://orcid.org/0000-0002-2992-4042 2020. In search of stock repurchases determinants in listed Indonesian firms during regulatory changes. Journal of Economic Behavior and Organization 176 , pp. 145-165. 10.1016/j.jebo.2020.04.013

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Abstract

Motivated by the introduction of share repurchases regulations in 1998 and 2007 coupled with unique characteristics of the Indonesian market, we investigate the effect of firm’s sub-optimal financial position on its share repurchases decisions. Then, we study the effect of these determinants through an exogenous shock, the 2007 regulatory change. We show that sub-optimal financial positions play a role in the corporate share repurchases decisions. Further, we find that the enactment of the regulations has a significant effect on firms’ undertaking share repurchases programs. Unlike the common perception and findings in the literature, we observe that the underpricing of shares has a weak effect on the Indonesian firms’ decisions to repurchase their stocks. Our results hold using several estimation methods that account for potential endogeneity issues.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Schools > Business (Including Economics)
Subjects:	H Social Sciences > HG Finance
Publisher:	Elsevier
ISSN:	0167-2681
Date of First Compliant Deposit:	10 June 2020
Date of Acceptance:	12 April 2020
Last Modified:	14 Nov 2024 01:30
URI:	https://orca.cardiff.ac.uk/id/eprint/131650

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