A Survey Of Stock Repurchase Motivations And Practices Of Major U.S. Corporations

Abstract

This study reports the findings of a comprehensive mail questionnaire survey of the stock repurchase programs of major U.S. corporations. Emphasis is placed on understanding the precipitating circumstances and motivations leading to stock repurchases. Contrary to recent studies, it appears that stock repurchases are viewed as financing rather than investment decisions. While the desire to change the capital structure was the most frequently expressed motivation, a majority of the responses were consistent with the signaling hypothesis. This fining suggests that signaling may indeed be as important as suggested by prior theoretical and empirical research.