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

Abdul Moin, Yilmaz Guney, Izidin El kalak

    Research output: Contribution to journalArticlepeer-review

    4 Citations (Scopus)

    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 firms’ sub-optimal financial position on their 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.
    Original languageEnglish
    Pages (from-to)145-165
    Number of pages21
    JournalJournal of Economic Behavior & Organization
    Volume176
    Early online date5 Jun 2020
    DOIs
    Publication statusPublished - Aug 2020

    Bibliographical note

    Publisher Copyright:
    © 2020

    Copyright:
    Copyright 2020 Elsevier B.V., All rights reserved.

    Keywords

    • Dividends
    • Indonesia
    • Regulations
    • Share repurchases
    • Sub-optimal decisions
    • Underpricing

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Organizational Behavior and Human Resource Management

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