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Corporate Cash Holdings and Share Buyback: Evidence from Emerging Markets

Author

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  • Vedika Saxena
  • Seshadev Sahoo

Abstract

This study evaluates corporate cash holdings (CCHs) as a determinant of share buyback for three emerging economies, India, Malaysia, and South Korea, from 2002 to 2020. We find CCH as a significant determinant of share buyback for our sample nations. Our results suggest that share buyback is a flexible way for firms to distribute excess cash across our sample nations. Our study also documents the impact of different country-level investor protection frameworks on buybacks. A favorable relationship between a strong investor protection environment (good governance) and buyback explains the effective role of buyback in resolving agency conflicts compared to dividends. JEL Codes: C5, F3, G3

Suggested Citation

  • Vedika Saxena & Seshadev Sahoo, 2023. "Corporate Cash Holdings and Share Buyback: Evidence from Emerging Markets," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 22(4), pages 437-463, December.
    • Handle: RePEc:sae:emffin:v:22:y:2023:i:4:p:437-463
    DOI: 10.1177/09726527231184555
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    More about this item

    Keywords

    Cash holdings; dividends; excess cash; investor protection; share buyback;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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