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

Moin, Abdul, Guney, Yilmaz and El Kalak, Izidin ORCID: 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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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: 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: 19 Nov 2023 16:54

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