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In search of stock repurchases determinants in listed Indonesian firms during regulatory changes

Moin, Abdul, Guney, Yilmaz and El Kalak, Izidin 2020. In search of stock repurchases determinants in listed Indonesian firms during regulatory changes. Journal of Economic Behavior and Organization 176 , pp. 145-165. 10.1016/j.jebo.2020.04.013
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Abstract

Motivated by the introduction of share repurchases regulations in 1998 and 2007 coupled with unique characteristics of the Indonesian market, we investigate the effect of firm’s sub-optimal financial position on its share repurchases decisions. Then, we study the effect of these determinants through an exogenous shock, the 2007 regulatory change. We show that sub-optimal financial positions play a role in the corporate share repurchases decisions. Further, we find that the enactment of the regulations has a significant effect on firms’ undertaking share repurchases programs. Unlike the common perception and findings in the literature, we observe that the underpricing of shares has a weak effect on the Indonesian firms’ decisions to repurchase their stocks. Our results hold using several estimation methods that account for potential endogeneity issues.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HG Finance
Publisher: Elsevier
ISSN: 0167-2681
Date of First Compliant Deposit: 10 June 2020
Date of Acceptance: 12 April 2020
Last Modified: 01 Jul 2020 12:18
URI: http://orca.cf.ac.uk/id/eprint/131650

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