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Optimal share repurchase decision model for retailers under supply chain collaboration

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  • Li, Xin
  • Xu, Zihan
  • Mei, Dexiang
  • Wang, Yu

Abstract

Equity repurchase agreements are a key financial strategy for mitigating conflicts of interest between investors and financing entities; at the same time, they signal confidence to supply chain firms. In high-growth sectors like retail (Alibaba Group), social e-commerce (TikTok), and technology (Cisco Systems), firms utilize repurchases to enhance market credibility, stabilize expectations, and optimize supply chain efficiency. This study employs a Stackelberg game model to examine the interaction between buyback decisions and supply chain operations. It explores how supply chain cooperation influences retailers' buyback strategies and the supply chain's overall performance. The findings suggest that an optimal buyback ratio alleviates conflicts among retailers, investors, and financiers while enhancing value distribution among stakeholders, including private equity firms and suppliers. Such coordination fosters Pareto improvements and strengthens supply chain stability. Additionally, supply chain collaboration reduces buyback control premiums, although greater retailer control concentration weakens cooperation incentives. This research offers profound insights into integrating capital market strategies and supply chain management.

Suggested Citation

  • Li, Xin & Xu, Zihan & Mei, Dexiang & Wang, Yu, 2025. "Optimal share repurchase decision model for retailers under supply chain collaboration," International Review of Financial Analysis, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:finana:v:103:y:2025:i:c:s1057521925003229
    DOI: 10.1016/j.irfa.2025.104235
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