How do share repurchases affect ownership concentration?
AbstractWe study how share repurchases affect the ownership stake of outside blockholders in 950 publicly-traded US corporations from 1996 through 2001, using a control function approach to address the possible endogeneity of repurchases. We find that share repurchases tend to make outside ownership less concentrated: repurchasing 1% of outstanding common equity decreases the fraction owned by large shareholders by around one and a half percentage points. This may decrease outside shareholders' influence over firm decision-making. Our results are confirmed when we restrict the sample to institutional owners, but not to individual owners.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Corporate Finance.
Volume (Year): 20 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/jcorpfin
Share repurchases; Ownership concentration; Blockholders; Corporate governance;
Other versions of this item:
- Devra L. Golbe & Ingmar Nyman, 2010. "How do share repurchases affect ownership concentration?," Hunter College Department of Economics Working Papers 430, Hunter College: Department of Economics, revised 2012.
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
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