Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 10, 2023 erstellt
Beschreibung:
We present evidence that share repurchases reduce investment inefficiencies related to short-term investors. Using U.S. data from 1988 to 2018, we first document that stock buybacks are associated with lower long-term investments. However, contrary to popular perception that buybacks sacrifice long-term value for short-term gains, we find that buybacks reduce overinvestment by short-term investors and do not lead to underinvestment. Results are robust to alternative measures of stock repurchase activity and investor horizon. We address endogeneity using an instrumental variable approach and conducting a difference-in-difference analysis based on Russell Indexes annual reconstitutions. Consistent with recent theoretical work, we conclude that share repurchases are not used by short-term investors at the expense of long-term investors