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The Effect of Corporate Governance on Stock Repurchases: Evidence from Sweden
Linnaeus University, Faculty of Business, Economics and Design, Linnaeus School of Business and Economics. (Corporate governance)ORCID iD: 0000-0001-6123-7886
Linnaeus University, Faculty of Business, Economics and Design, Linnaeus School of Business and Economics. (Corporate governance)
2010 (English)In: Corporate governance: An International Review, ISSN 0964-8410, E-ISSN 1467-8683, Vol. 18, no 5, 457-472 p.Article in journal (Refereed) Published
Abstract [en]

Manuscript Type: Empirical

Research Question/Issue: The paper examines whether corporate governance differences affect firms' stock repurchasing behavior. Previous hypotheses on stock repurchases, well-supported by US data, are based on assumptions of managerial autonomy that might not be descriptive in corporate governance systems characterized by influential controlling shareholders such as the Swedish. Firm-level corporate governance arrangements may also affect firms' incentives to repurchase stock.

Research Findings/Insights: Stock-repurchasing patterns among Swedish firms differ from those previously observed among US firms. The findings indicate that Swedish firms do not repurchase stock to distribute excess cash, signal undervaluation, or fend off takeovers. Stock repurchases are made in addition to dividends and thus do not substitute for them. Firm-level corporate governance arrangements directly affect stock repurchasing behavior. Firms without a dominant controlling owner seem to use stock repurchases to increase leverage. The existence of a dominant controlling shareholder diminishes the propensity for stock repurchases, while cross listing on a US or UK stock market increases that propensity.

Theoretical/Academic Implications: The findings suggest that corporate governance differences affect stock repurchasing behavior. The agency-theoretical view of the firm, on which the leading hypotheses on stock repurchases are based, accurately predicts stock repurchases only in certain institutional and governance settings.

Practitioner/Policy Implications: The study suggests that differences in national and firm-level corporate governance must be taken into account in order to accurately assess outcomes of regulatory reforms and/or harmonization attempts.

Place, publisher, year, edition, pages
2010. Vol. 18, no 5, 457-472 p.
National Category
Economics and Business
Research subject
Economy, Ekonomistyrning
Identifiers
URN: urn:nbn:se:lnu:diva-8526OAI: oai:DiVA.org:lnu-8526DiVA: diva2:352189
Available from: 2010-09-18 Created: 2010-09-18 Last updated: 2016-05-03Bibliographically approved
In thesis
1. Convergence of National Corporate Governance Systems:: Localizing and Fitting the Transplants
Open this publication in new window or tab >>Convergence of National Corporate Governance Systems:: Localizing and Fitting the Transplants
2014 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The purpose of this thesis is to elucidate the phenomenon of legal transfers from the perspective of the dominant comparative corporate governance research paradigm. Drawing on legal studies and empirical observations, the thesis develops a terminology for understanding the legal transplant metaphor in comparative corporate governance and problematizes the debate on the convergence or divergence of corporate governance systems. This purpose is achieved through five empirically-based articles that are included in the thesis. The first article concerns a change in the Swedish Companies Act that allows for stock repurchases. The second article discusses the voluntary and then mandatory introduction of nomination committees. The third and the fourth articles focus on the introduction of the Swedish corporate governance code. Finally, the fifth article discusses the role played by independent directors in the Swedish corporate governance setting. The focus on legal transplants broadens the framework of comparative corporate governance in three respects. First, it develops and applies a clearer framework for distinguishing between accepted and rejected legal transplants (based on Watson, 1974, Miller, 2003 and Mattei, 1994), thus refining the debate regarding convergence or divergence of corporate governance systems (e.g. Hansmann and Kraakman, 2004, and Branson, 2001). Second, the empirical studies demonstrate how imported regulations can be “localized” (Gillespie, 2008a) by local regulators and/or “fitted” (adapted from Kanda and Milhaupt, 2003) by other local actors. The studies show that fitting often precedes localizing. Third, the thesis ads to a growing body of research (e.g. Buck et al., 2004; Lutz, 2004 and Collier and Zaman, 2005) emphasizing that convergence and divergence are not necessarily two empirically or analytically distinguishable processes. Rather, depending on the perspective of the scholar, convergence and divergence might refer to very similar – or even identical – processes. Finally, in focusing on the transplant process, this thesis offers a description and analysis of the role played by various key actors in the Swedish corporate governance system.

Place, publisher, year, edition, pages
Växjö: Linnaeus University Press, 2014
Series
Linnaeus University Dissertations, 190/2014
National Category
Social Sciences Business Administration
Research subject
Economy, Business administration
Identifiers
urn:nbn:se:lnu:diva-37530 (URN)978-91-87925-17-7 (ISBN)
Public defence
2014-10-24, Weber, Hus K, Växjö, 13:00 (English)
Supervisors
Funder
The Jan Wallander and Tom Hedelius Foundation
Available from: 2014-10-08 Created: 2014-10-08 Last updated: 2014-10-08Bibliographically approved

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