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Business Law, Public Responsibility, and Ethics Commons

Open Access. Powered by Scholars. Published by Universities.®

Corporate Finance

2016

Long-term performance

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Full-Text Articles in Business Law, Public Responsibility, and Ethics

Governance And Post-Repurchase Performance, Gary Caton, Choo Yong, Jeremy Goh, Yen Teik Lee, Scott Linn Aug 2016

Governance And Post-Repurchase Performance, Gary Caton, Choo Yong, Jeremy Goh, Yen Teik Lee, Scott Linn

Research Collection Lee Kong Chian School Of Business

Payout policies based on share repurchase programs provide greater flexibility than do those based on cash dividends. We develop and test an empirical model in which strongly governed companies outperform weakly governed companies after announcing share repurchase programs. Our findings include positive associations between strong governance and both post-announcement adjusted operating performance and abnormal stock returns. The results are robust to sample selection bias, different sample criteria, governance measurement, and various control variables. In addition, governance strength is associated with larger post-announcement changes in CEO incentive compensation and merger and acquisition activity, both of which we argue are consistent with ...