Cookies

We use cookies to ensure that we give you the best experience on our website. By continuing to browse this repository, you give consent for essential cookies to be used. You can read more about our Privacy and Cookie Policy.


Durham Research Online
You are in:

An empirical survey of the motivation for share repurchases in the UK.

Dixon, R. and Palmer, G. and Stradling, B. and Woodhead, A. (2008) 'An empirical survey of the motivation for share repurchases in the UK.', Managerial finance., 34 (12). pp. 886-906.

Abstract

Purpose – Most research on share repurchases is based on the USA. Recently, the rate of share repurchases by UK companies has increased significantly; such a marked increase in activity would suggest a change in strategic factors generating this activity. This paper aims to focus on UK practice, the motivations of UK companies to repurchase shares and compares similar research in the USA. Design/methodology/approach – Strategic motives for share repurchase activity are examined by a questionnaire survey of the finance directors of the top UK 200 companies. The outcome is compared to equivalent US research. The theoretical underpinning of the survey is based on six prominent hypotheses from the academic literature. Findings – The results indicate that a primary motive of share repurchases in the UK is to achieve an optimal capital structure, and that the requirement to cancel shares is fundamental to buy-back decisions in the UK. Research limitations/implications – USA/UK comparison has limitations, nevertheless it highlights differences and possible reasons. A follow-up study in the current market conditions may give further clarity. Also, a survey of smaller quoted companies may further enhance our understanding of the motives. Practical implications – The likelihood is of this trend being maintained, especially in view of legal development. Originality/value – Individual respondents indicated that finance directors have a genuine interest in this topic and that further research would be beneficial in both practical and academic use. Share buy-backs can be an effective part of the overall strategy of a company, however the effects of a repurchase are ultimately short term.

Item Type:Article
Keywords:Capital, Financial restructuring, Share options, Shares, United Kingdom, United States of America.
Full text:Full text not available from this repository.
Publisher Web site:http://dx.doi.org/10.1108/03074350810915833
Record Created:22 May 2009 11:05
Last Modified:01 Jun 2009 12:09

Social bookmarking: del.icio.usConnoteaBibSonomyCiteULikeFacebookTwitterExport: EndNote, Zotero | BibTex
Usage statisticsLook up in GoogleScholar | Find in a UK Library