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Open Access
Article
Publication date: 16 August 2019

Hong Thi Hoa Nguyen, Dat Tien Nguyen and Anh Hong Pham

The purpose of this paper is to examine the effects of share repurchase announcements on the stock price of rival firms in the same industry in Vietnam during 2010–2017.

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Abstract

Purpose

The purpose of this paper is to examine the effects of share repurchase announcements on the stock price of rival firms in the same industry in Vietnam during 2010–2017.

Design/methodology/approach

Both event study and t-test are employed to test the effects of share repurchase announcements on rival firms. In addition, cross-sectional analysis by ordinary least square regression is also applied for investigating the heterogeneous effects due to information transfer.

Findings

The finding shows that stock repurchase announcements result in a positive and significant valuation effect for both announcing firms and rival firms in Vietnam. Furthermore, the degree of signal to the industry is conditional on the degree of signal about the announcing firms as a contagious effect. Intra-industry effects are more favorable when profit performance of rival firms is good and when leverage of rival firms is low.

Practical implications

Rival firms can seize opportunities surrounding share repurchase announcements in the same industry in Vietnam. However, due to firm characteristics, intra-industry effects of stock repurchases differ among industries.

Originality/value

By examining different methods, the paper attributes valuable results to investigate the stock price behavior of rival firms in the same industry when firms announce stock repurchase in Vietnam.

Open Access
Article
Publication date: 13 December 2022

Heewoo Park and Yuen Jung Park

The authors investigate whether the effects of stock buyback announcements on credit default swap (CDS) spread changes for US firms depend on macroeconomic conditions. The authors…

Abstract

The authors investigate whether the effects of stock buyback announcements on credit default swap (CDS) spread changes for US firms depend on macroeconomic conditions. The authors find that abnormal CDS spreads increase for small-sized firms announced to repurchase a higher share ratio during the normal period. In contrast, abnormal CDS spreads decrease for big-sized firms regardless of the magnitude of the repurchase ratio during the crisis period. The results of this study suggest that the wealth transfer effect dominates the signaling effect for small-sized firms with higher target ratios during the normal period. In contrast, the signaling effect is stronger for bondholders of big-sized firms during the crisis period.

Details

Journal of Derivatives and Quantitative Studies: 선물연구, vol. 31 no. 1
Type: Research Article
ISSN: 1229-988X

Keywords

Content available
Article
Publication date: 25 September 2007

M. Massa

134

Abstract

Details

Strategic Direction, vol. 23 no. 10
Type: Research Article
ISSN: 0258-0543

Keywords

Open Access
Article
Publication date: 20 June 2022

Eun Jung Lee, Sungmin Kim and Yongwon Jang

This paper examines whether long-term foreign investors may force firms to use a costly dividend to mitigate inefficient managerial behavior. The authors also hypothesize that the…

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Abstract

This paper examines whether long-term foreign investors may force firms to use a costly dividend to mitigate inefficient managerial behavior. The authors also hypothesize that the relation between foreign investment horizons and payout policy depends upon the extent of the corporate governance. The authors find that firms held by long-term foreign investors make dividend more often in the subsequent years. The authors also find that foreign investors with long-term investments do not cause firms to pay dividends when firms have strong corporate governance. It suggests that long-term foreign investors serve as a substitute for strong corporate governance with respect to controlling agency conflicts.

Details

Journal of Derivatives and Quantitative Studies: 선물연구, vol. 30 no. 3
Type: Research Article
ISSN: 1229-988X

Keywords

Content available
Article
Publication date: 2 January 2009

Craig Henry

510

Abstract

Details

Strategy & Leadership, vol. 37 no. 1
Type: Research Article
ISSN: 1087-8572

Open Access
Article
Publication date: 30 November 2016

Sungmin Kim and Yongwon Jang

Firms can use dividends and/or share repurchases to distribute cash to shareholders. Jagannathan, Stephens, and Weisbach (2000) argue that managers tend to use dividends to pay…

164

Abstract

Firms can use dividends and/or share repurchases to distribute cash to shareholders. Jagannathan, Stephens, and Weisbach (2000) argue that managers tend to use dividends to pay out permanent cash flows and repurchases to pay out temporary cash flows. This paper examines Korean firms’ decisions on their choices between paying out cash flows in the form of dividends or share repurchases. We focus on the permanence of cash flows. To complete this analysis, we decompose cash flows into a transitory component and a permanent one of each firm, employing the approach of Beveridge and Nelson (1981). We find that higher permanent cash flows increase the probability of a dividend increase, while higher temporary cash flows increase the probability of repurchases. And Korean firms tend to choose both dividend change and repurchases when temporary cash flows increase, rather than to choose only repurchases without dividend change. These empirical results show that Korean firms take into consideration of permanence of cash flows in the choice of their payout methods.

Details

Journal of Derivatives and Quantitative Studies, vol. 24 no. 4
Type: Research Article
ISSN: 2713-6647

Keywords

Open Access
Article
Publication date: 22 June 2023

Omar Esqueda and Thomas O'Connor

The authors measure the cost of equity to earnings yield differential for a sample of 2,035 non-financial firms. In a series of Logit and Tobit regressions, the authors examine if…

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Abstract

Purpose

The authors measure the cost of equity to earnings yield differential for a sample of 2,035 non-financial firms. In a series of Logit and Tobit regressions, the authors examine if the cost of equity to earnings yield differential is related to dividend policy in the manner predicted by agency theory.

Design/methodology/approach

Agency theory says a firm's optimal dividend policy is partially determined by the relationship between the earnings yield and the cost of equity capital. When the cost of equity is higher (lower) than the earnings yield, firms are motivated to (not) pay dividends as this reduces the cost of capital and holding other things constant, increases corporate valuations. The authors test whether managers set dividend policies to maximize the value of the firm.

Findings

The study’s findings show that when the cost of equity is higher (lower) than earnings yield, firms are more (less) likely to be dividend payers and the payouts are higher (lower). The results are robust to the inclusion of share repurchases as an alternative to cash distributions. The study’s findings support the cost of equity hypothesis and are consistent with alternative dividend theories.

Originality/value

The study’s findings support the cost of equity hypothesis and are consistent with alternative dividend theories. To the authors’ knowledge, this is the first paper testing the cost of equity hypothesis.

Details

Managerial Finance, vol. 50 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Abstract

Details

Management Decision, vol. 52 no. 7
Type: Research Article
ISSN: 0025-1747

Open Access
Article
Publication date: 20 June 2022

Philani Shandu and Imhotep Paul Alagidede

The study endeavours to determine (1) whether the disposition effect exists among South African investor teams, (2) whether it is causally intensified by a set of psychosocial…

Abstract

Purpose

The study endeavours to determine (1) whether the disposition effect exists among South African investor teams, (2) whether it is causally intensified by a set of psychosocial factors and (3) whether the disposition effect causally reduces investor welfare.

Design/methodology/approach

Following a natural field experimentation design involving a sample of investor teams participating in the 2019 run of the JSE University Investment Challenge, the authors use regression adjustments as well as bootstrap tests to investigate the casual implications of a set of psychosocial factors on the intensity of the disposition effect, as well on the attenuation of market-adjusted ex post returns (i.e. investor welfare).

Findings

South African investor teams are susceptible to the disposition effect, and their susceptibility to the bias is associated with attenuated investor welfare. Furthermore, low female representation in an investor team causally intensifies the disposition effect, subsequently leading to a causal reduction in investor welfare.

Originality/value

Using evidence from real-world observation, the authors contribute to the literature on team gender diversity and investment decision-making, and – using Hofstede's (2001) cultural dimensions – the authors offer a comprehensive account for how differences in culture may lead to differences in gender-related disposition effects across different nationalities. The authors also introduce to the literature experimental evidence from the field that clearly demonstrates that – among South African investor teams – a causal relationship exists (1) between female representation and the disposition effect, and (2) between the disposition effect and investor welfare.

Details

Review of Behavioral Finance, vol. 16 no. 1
Type: Research Article
ISSN: 1940-5979

Keywords

Open Access
Article
Publication date: 17 April 2019

Zaheer Anwer, Alam Asadov, Nazrol K.M. Kamil, Mehroj Musaev and Mohd Refede

This paper aims to explore the structure and underlying contracts of Islamic venture capital (IVC) and to evaluate its prospects. VC can be perceived as an investment vehicle…

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Abstract

Purpose

This paper aims to explore the structure and underlying contracts of Islamic venture capital (IVC) and to evaluate its prospects. VC can be perceived as an investment vehicle possessing most of the desirable attributes of a Sharīʿah-compliant investment vehicle. There are certain issues involved in the formation, operations and exit strategies of these investments that are discussed in detail in this paper.

Design/methodology/approach

A detailed review of relevant literature is performed to identify how IVC investments can be made and how related issues may be resolved.

Findings

IVC investment has potential of incorporating Sharīʿah-compliant investment modes. Additionally, it may offer higher than average returns. These attributes can be desirable for Islamic finance industry that is currently in need of equity-based financing products. The major causes of lesser growth of IVC investments are lack of awareness among the investors and the absence of viable investment opportunities for small- and medium-scale investors. IVC may attract general public if established after extensive research aimed at introducing innovative products.

Originality/value

This paper provides an overview of a truly Sharīʿah-compliant investment vehicle, furnishes a synthesis of various suggestions made by industry and academia and suggests viable solutions for valuation, risk management and exit strategies.

Details

ISRA International Journal of Islamic Finance, vol. 11 no. 1
Type: Research Article
ISSN: 0128-1976

Keywords

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