This book integrates elements from agency theory and signaling
theory and draws upon recent changes in the Australia payout policy
and incentives pay for risk-averse employees, to provide
theoretical and empirical analyses that explain the paradox of the
popularity of on-market stock buyback activities in a market
environment characterized by reasonably high share prices. The
authors utilize a dynamic model that rationalizes this paradox,
which is divided into three components. The first predicts that
executives may be conducting on-market stock buyback programs to
adjust equity-based remuneration for risk-averse employees, thereby
motivating their performance without granting them additional
costly equity incentive plans; the second predicts that companies
are likely to invest in stock buyback programs to increase the
ownership stakes of employees in the firm, thereby inducing
risk-averse employees to increase their productivity which
increases firm value; while the third predicts that shareholders
would benefit from incentives-induced buybacks if a firm’s
opportunity cost of funds spent on buybacks is less than its
inverse price-earnings ratio. The authors’ findings highlight
differences in the market responses toward announced repurchase
motives, implying that not all incentives-induced buybacks are
value-destructive buybacks. Specifically, the widespread assumption
that stock buyback programs stifle investments in human and capital
stock may be subjective as the findings show that
incentives-induced buybacks may be value-creative or
value-destructive depending on share repurchase motives of stock
buyback programs. The book will be a useful guide for scholars and
researchers of finance, corporate finance, financial economics, and
financial accounting.
General
Imprint: |
Taylor & Francis
|
Country of origin: |
United Kingdom |
Series: |
Banking, Money and International Finance |
Release date: |
November 2023 |
First published: |
2024 |
Authors: |
Gilbert Amahoro Ndayisaba
• Abdullahi Dahir Ahmed
|
Dimensions: |
234 x 156mm (L x W) |
Pages: |
248 |
ISBN-13: |
978-1-03-213114-6 |
Categories: |
Books
|
LSN: |
1-03-213114-4 |
Barcode: |
9781032131146 |
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