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How do share repurchases affect ownership concentration?

  • Golbe, Devra L.
  • Nyman, Ingmar

We 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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Article provided by Elsevier in its journal Journal of Corporate Finance.

Volume (Year): 20 (2013)
Issue (Month): C ()
Pages: 22-40

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Handle: RePEc:eee:corfin:v:20:y:2013:i:c:p:22-40
DOI: 10.1016/j.jcorpfin.2012.11.002
Contact details of provider: Web page: http://www.elsevier.com/locate/jcorpfin

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