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Ethical Issues Around Share Repurchase Announcements: The Role of Social Capital

Author

Listed:
  • Atul Gupta

    (Bentley University)

  • Alok Nemani

    (Bentley University)

  • Kartik Raman

    (Bentley University)

Abstract

We examine whether social capital mitigates managerial opportunism around share repurchase announcements. We find that firms headquartered in high social capital states are associated with: (i) higher repurchase completion rates, and more so in environments where governance is weak and the potential for misleading investors is high, (ii) a smaller likelihood of information manipulation such as revealing bad news before repurchases, and (iii) lower completion rates when shares are less undervalued. By documenting that firms’ external social environments help curb managerial opportunism, our study suggests that the location of headquarters facilitates trustworthiness and affects ethical considerations in corporate announcements.

Suggested Citation

  • Atul Gupta & Alok Nemani & Kartik Raman, 2024. "Ethical Issues Around Share Repurchase Announcements: The Role of Social Capital," Journal of Business Ethics, Springer, vol. 192(4), pages 821-844, July.
    • Handle: RePEc:kap:jbuset:v:192:y:2024:i:4:d:10.1007_s10551-023-05552-4
    DOI: 10.1007/s10551-023-05552-4
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    More about this item

    Keywords

    Share repurchases; Social capital; Repurchase completion; Trustworthiness; Information manipulation;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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