The Pump-Priming Effect of Regulatory Reform on Stock Repurchases : Evidence from Lifting the Ban on Treasury Stocks in Japan
This study investigates corporate reactions to the deregulation of stock repurchases set forth on 1 October 2001, in Japan, by looking at the motivations for stock repurchases. We found that stock repurchases increased significantly after the ban on treasury stocks was lifted. Our results show that firms with free-cash flow problems initiated a repurchase plan to distribute excess cash to shareholders and reduce agency costs over the sample period. In addition, firms who wanted to signal undervaluation also undertook stock repurchases over the sample period. These firms were affected by the deregulation, unlike firms that repurchase to reduce agency costs. We determined that firms with weak incentives to signal undervaluation increased stock repurchases significantly in order to respond to the deregulation, since these firms had the ability to take advantage of treasury stock purchases.
|Date of creation:||Apr 2010|
|Contact details of provider:|| Web page: http://www.cm.hit-u.ac.jp/hjbs/|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:hit:hjbswp:109. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Digital Resources Section, Hitotsubashi University Library)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.