کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
5093465 | 1478450 | 2014 | 19 صفحه PDF | دانلود رایگان |
- Capital structure adjustments are a value-increasing motive for repurchases.
- Capital structure adjustments by undervalued firms create more value.
- Underlevered and undervalued firms are more likely to announce repurchase programs.
We evaluate motives for share repurchases using a unified framework where a firm has a target capital structure and has equity that can be mispriced. We document that capital structure adjustments are a value-increasing motive for repurchases and that the extent to which adjusting capital structure through a repurchase creates value depends on the undervaluation of the firm. Underlevered and undervalued firms enjoy the greatest economic gains from a repurchase, as evidenced by the stock price reaction to the repurchase announcement, and these firms are more likely to announce a share repurchase program.
Journal: Journal of Corporate Finance - Volume 26, June 2014, Pages 182-200