Determinants of Firms’ Share Repurchases: An International Investigation

Abstract

In recent years, it has been observed that the dividend payout made by the share repurchases method has increased significantly in practice. This study aims to research the determinants of share repurchases of firms. Therefore, the sample of the study consists of a total of 161,592 observations and the data of 22,445 firms operating in 62 countries around the world between 2009-2019. The created model has been analyzed by logistic regression and the ordinary least squares test method. The independent variables used in the study consist of firm-level and country-level variables such as profitability, leverage, asset tangibility, size, growth opportunities, research and development expenditure rates, gross domestic product, foreign direct investment, and domestic savings rate. Also, countries are classified as countries that have adopted common law and civil law. According to the obtained results, the effect of foreign direct investment rate has no statistically significant on share repurchases according to both methods. Besides, it has been determined that other variables both at the firm- level and at the country level, have statistically significant and considerable effects on the dividend distribution of the firms by the share repurchases method. In addition, in researching the determinants of share repurchases, it has been concluded that the obtained findings by the logistic regression method reveal more consistent results with the theoretical expectations and previous evidence in the literature. The developed model within the scope of share repurchases decisions shows the strong and original side of the study. Consequently, the results of this study are thought to be a guide that gives a new perspective and contributes to the literature, practitioners, and investors.

Keywords

• Dividend Payout
• Share Repurchases
• Logistic Regression
• Least Squares Method
• Legal System

Firmaların Pay Senedi Geri Satın Alımlarının Belirleyicileri: Uluslararası Bir İnceleme

Abstract

Son yıllarda pay senedi geri satın alım yöntemi ile yapılan kâr payı dağıtımının uygulamada ciddi şekilde arttığı görülmektedir. Bu çalışmanın amacı firmaların pay senedi geri satın alımının belirleyicilerini araştırmaktır. Bu doğrultuda çalışmanın örneklemi 2009-2019 yılları arasında dünya genelinde 62 ülkede faaliyet gösteren 22,445 firma verisinden ve toplam 161,592 gözlem sayısından meydana gelmektedir. Oluşturulan model, lojistik regresyon ve en küçük kareler test yöntemiyle analiz edilmiştir. Çalışmada kullanılan bağımsız değişkenler kârlılık, kaldıraç, maddi duran varlıklar, büyüklük, büyüme fırsatları, araştırma geliştirme harcama oranı ile gayri safi yurt içi hâsıla, doğrudan yabancı yatırım, yurt içi tasarruf oranı olmak üzere firma ve ülke düzeyindeki değişkenlerden oluşmaktadır. Ayrıca ülkeler benimsedikleri hukuk sistemi açısından Anglosakson ve Kıta Avrupası Hukuk sistemi olarak sınıflandırılmıştır. Elde edilen sonuçlar itibariyle doğrudan yabancı yatırım oranı her iki yönteme göre pay geri alımları üzerine etkisi istatistiki olarak anlamlı çıkmamıştır. Bunun yanında hem firma düzeyinde hem de ülke düzeyindeki diğer değişkenlerin firmaların pay senedi geri satın alım yöntemiyle yaptıkları kâr payı dağıtımına önemli ve istatistiksel olarak anlamlı etkilerin olduğu tespit edilmiştir. Ayrıca pay senedi geri satın alımlarının belirleyicilerinin incelenmesinde, lojistik regresyon yöntemi ile elde edilen bulguların teorik beklentilerle ve literatürde yer alan önceki bulgularla daha uyumlu sonuçlar ortaya koymasından dolayı, bu yöntemin daha tutarlı bir yöntem olduğu sonucuna ulaşılmıştır. Pay senedi geri satın alım kararları kapsamında geliştirilen model çalışmanın güçlü ve özgün yanını göstermektedir. Dolayısıyla bu çalışmanın sonuçlarının literatüre, uygulamacılara, yatırımcılara katkı sağlayan ve yeni bir perspektif kazandıran bir kılavuz olduğu düşünülmektedir.

Keywords

• Kar Payı Dağıtımı
• Pay Senedi Geri Satın Alımı
• Lojistik Regresyon
• En Küçük Kareler Yöntemi
• Yasal Yapı

References

1. Aivazian, V. A., Booth, L., ve Cleary, S. (2006). Dividend smoothing and debt ratings. Journal of Financial and Quantitative Analysis, 41(2), 439-453.
2. Aktan, M. F. (2012). Şirketlerin kendi hisselerini geri satın alması [Yüksek lisans tezi, Ankara Üniversitesi]. YÖK Ulusal Tez Merkezi Veri Tabanı.
3. Arsoy, M. F. (2017). Hisse Geri Alım Programı Duyurularının Şirketlerin Piyasa Değerlerine Etkisi: Borsa İstanbul Örneği. Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi, 12(2), 1-22.
4. Aydın, N., Başar, M ve Coşkun M. (2017), Finansal Yönetim, 5. Bs., Ankara: Detay Yayıncılık.
5. Baker, H. K., Singleton, J. C., ve Veit, E. T. (2011). Survey research in corporate finance: bridging the gap between theory and practice. New York, Oxford University Press.
6. Baker, H. K.ve Weigand, R. (2015). Corporate dividend policy revisited. Managerial Finance. 41(2), 126-144
7. Bhattacharya, S. (1979). Imperfect information, dividend policy, and" the bird in the hand" fallacy. The Bell Journal of Economics, 10(1), 259-270.
8. Bhattacharyya, N. (2007), “Dividend policy: a review”, Managerial Finance, 33(1), 4-13.

9. Black, F. (1976). The dividend puzzle. The Journal of Portfolio Management, 2(2), 5-8.
10. Boudry, W. I., Kallberg, J. G., ve Liu, C. H. (2013). Investment opportunities and share repurchases. Journal of Corporate Finance, 23, 23-38.
11. Brealey, R.A., Myers S.C., Allen F. (2011). Principles Of Corporate Finance. 10th Edition, New York: Mc Graw Hill/Irwin.
12. Chan, K., Ikenberry, D., ve Lee, I. (2004). Economic sources of gain in stock repurchases. Journal of Financial and Quantitative Analysis, 39(3), 461-479.
13. Chen, N. Y. ve Liu, C. C. (2021). The effect of repurchase regulations on actual share reacquisitions and cost of debt. The North American Journal of Economics and Finance, 55, 101298.
14. Chen, Z., Y. L. Cheung, A. Stouraitis and A. W. S. Wong (2005), ‘Ownership Concentration, Firm Performance, and Dividend Policy in Hong Kong’, Pacific Basin Finance Journal, 13(4), 431–49.
15. Çam, İ. ve Özer, G. (2022). The influence of country governance on the capital structure and investment financing decisions of firms: An international investigation. Borsa Istanbul Review, 22(2), 257-271.
16. DeAngelo, H., DeAngelo, L., ve Stulz, R. M. (2006). Dividend policy and the earned/contributed capital mix: a test of the life-cycle theory. Journal of Financial economics, 81(2), 227-254.
17. Dewasiri, N. J. ve Yatiwella, W. B. (2016). Why do companies pay dividends?: a comment. Journal of Corporate Ownership and Control. 13(2), 443-453.
18. Dhanani, A. (2016). Corporate share repurchases in the UK: Perceptions and practices of corporate managers and investors. Journal of Applied Accounting Research. 17(3), 331–355 .
19. Dittmar, A. K. (2000). Why do firms repurchase stock. The Journal of Business, 73(3), 331-355.
20. Easterbrook, F. H. (1984). Two agency-cost explanations of dividends. The American Economic Review, 74(4), 650-659.
21. Ertaş, F. C. ve Karaca, S. (2010). Kâr Dağıtımının İlânı ve Gerçekleşmesi Arasında Geçen Sürenin Firma Değerine Etkisi. Muhasebe ve Finansman Dergisi , 47, 58-68.
22. Fama, E. F. ve French, K. R. (2000). Forecasting profitability and earnings. The Journal of Business, 73(2), 161-175.
23. Fama, E. F. ve French, K. R. (2001). Disappearing dividends: changing firm characteristics or lower propensity to pay?. Journal of Financial Economics, 60(1), 3-43.
24. Fama, E. F. ve French, K. R. (2002). Testing trade-off and pecking order predictions about dividends and debt. The Review of Financial Studies, 15(1), 1-33.
25. Ferris, S. P., Jayaraman, N., ve Sabherwal, S. (2009). Catering effects in corporate dividend policy: The international evidence. Journal of Banking & Finance, 33(9), 1730-1738.
26. Fettahoğlu, S. (2015). Hane halkının finans eğitimi ve finansal okuryazarlık düzeyleri üzerine Kocaeli’nde bir araştırma. Muhasebe ve Finansman Dergisi, 67, 101-116.
27. Gitman, L.J. ve Zutter C.J. (2014). Principles of Managerial Finance, 14.Th Edition, Harlow: Pearson Education.
28. Gopal R. CA., (2008). Financial Management, New Delhi: New Age International Pvt. Ltd., Publishers.
29. Gordon, M. J. (1963). Optimal investment and financing policy. The Journal of Finance, 18(2), 264-272.
30. Goyal, A. ve Muckley, C. (2013). Cash dividends and investor protection in Asia. International Review of Financial Analysis, 29, 31-43.
31. Grullon, G. ve Michaely, R. (2002). Dividends, share repurchases, and the substitution hypothesis. the Journal of Finance, 57(4), 1649-1684.
32. Grullon, G. ve Michaely, R. (2004). The information content of share repurchase programs. The Journal of Finance, 59(2), 651-680.
33. Gujarati, D.N. ve Porter, D.C. (2009). Basic Econometrics, 5th Ed. New York: Mc Graw Hill/Irwin
34. Hasan, F., Shafique, S., Das, B. C., ve Shome, R. (2022). R&D intensity and firms dividend policy: evidence from BRICS countries. Journal of Applied Accounting Research, 23(4), 846-862.
35. Holder, M. E., Langrehr, F. W., ve Hexter, J. L. (1998). Dividend policy determinants: An investigation of the influences of stakeholder theory. Financial Management, 27(3), 73-82.
36. Iyer, S. R. ve Rao, R. P. (2017). Share repurchases and the flexibility hypothesis. Journal of Financial Research, 40(3), 287-313.
37. Jensen, M. C. ve Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.
38. Jensen, M.C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76(1), 323-329.
39. Jeong, J. (2013). Determinants of dividend smoothing in emerging market: The case of Korea. Emerging Markets Review, 17, 76-88.
40. Jiang, Z., Kim, K. A., Lie, E., ve Yang, S. (2013). Share repurchases, catering, and dividend substitution. Journal of Corporate Finance, 21, 36-50.
41. John, K., Knyazeva, A., ve Knyazeva, D. (2011). Does geography matter? Firm location and corporate payout policy. Journal of Financial Economics, 101(3), 533-551.
42. Julio, B. ve Ikenberry, D. L. (2004). Reappearing dividends. Journal of Applied Corporate Finance, 16(4), 89-100.
43. Karacan, A.İ.ve Karacan E. E. (2016). Halka Açık Şirketlerde Kâr Dağıtımı, 1. Bs. İstanbul: Legal Yayıncılık.
44. Karakuş, R., İsrafil, Z. O. R., ve Küçük, Ş. Y. (2017). Pay Geri Alım İlanlarının Hisse Getirisine Etkisi. Muhasebe ve Finansman Dergisi, 75, 55-70.
45. Karyağdı, N. (2014). Tüm Yönleriyle Kâr Dağıtımı. Maliye Hesap Uzmanları Derneği. 4. Bs. İstanbul: Oluş Yayıncılık.
46. Kim, J., Yang, I., Yang, T., ve Koveos, P. (2021). The impact of R&D intensity, financial constraints, and dividend payout policy on firm value. Finance Research Letters, 40, 101802.
47. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., ve Vishny, R. (2000). Investor protection and corporate governance. Journal of Financial Economics, 58(1-2), 3-27.
48. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., ve Vishny, R. W. (1998). Law and finance. Journal of Political Economy, 106(6), 1113-1155.
49. Lee, C. I., Ejara, D. D., ve Gleason, K. C. (2010). An empirical analysis of European stock repurchases. Journal of Multinational Financial Management, 20(2-3), 114-125.
50. Lintner, J. (1962). Dividends, earnings, leverage, stock prices and the supply of capital to corporations. The review of Economics and Statistics, 44(3), 243-269.
51. Litzenberger, R. H. ve Ramaswamy, K. (1979). The effect of personal taxes and dividends on capital asset prices: Theory and empirical evidence. Journal of Financial Economics, 7(2), 163-195.
52. Manconi, A., Peyer, U., ve Vermaelen, T. (2014). Buybacks around the world. European Corporate Governance Institute (ECGI)-Finance Working Paper, 436.
53. Manos, R. ve Yaron, J. (2008). Measuring the performance of microfinance providers: an assessment of past and present practices. International Journal of Financial Services Management, 3(2), 171-187.
54. Miller, M. H. ve Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. the Journal of Business, 34(4), 411-433.
55. Moin, A. Guney, Y., ve El Kalak, I. (2020). In search of stock repurchases determinants in listed Indonesian firms during regulatory changes. Journal of Economic Behavior & Organization, 176, 145-165.
56. Mueller, D. C. (1972). A life cycle theory of the firm. The Journal of Industrial Economics, 20(3), 199-219.
57. Myers, S. C. ve Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
58. Myers, S.C. (1984), “The capital structure puzzle. Journal of Finance,39(1), 575-592.
59. Ofori‐Sasu, D., Abor, J. Y., ve Osei, A. K. (2017). Dividend policy and shareholders’ value: evidence from listed companies in Ghana. African Development Review, 29(2), 293-304.
60. Okka, Osman (2015), Finansal Yönetim: Teori ve Çözümlü Problemler. 6. Bs., Ankâra: Nobel Akademik Yayıncılık.
61. Pandey, I. M., ve Bhat, R. (2007). Dividend behaviour of Indian companies under monetary policy restrictions. Managerial Finance.
62. Pinto, G. ve Rastogi, S. (2019). Sectoral analysis of factors influencing dividend policy: Case of an emerging financial market. Journal of Risk and Financial Management, 12(3), 110.
63. Rashid, A., ve Rahman, A. A. (2008). Dividend policy and stock price volatility: evidence from Bangladesh. The Journal of Applied Business and Economics, 8(4), 71.
64. Renneboog, L. ve Trojanowski, G. (2007). Control structures and payout policy. Managerial Finance. 33(1),43-64
65. Rogers, W. (1994). Regression standard errors in clustered samples. Stata technical bulletin, 3(13),19-23.
66. Ross, S. A. (1977). The determination of financial structure: the incentive-signalling approach. The Bell Journal of Economics, 8(1), 23-40.
67. Sayılgan, G. (2017). Soru ve Yanıtlarıyla İşletme Finansmanı.7. Bs., Ankâra: Siyasal Kitapevi.
68. Shefrin, H. M. ve Statman, M. (1984). Explaining investor preference for cash dividends. Journal of Financial Economics, 13(2), 253-282.
69. Tran, Q. T. (2020). Corruption, agency costs and dividend policy: International evidence. The Quarterly Review of Economics and Finance, 76, 325-334.
70. Trinh, Q. D., Haddad, C., ve Tran, K. T. (2022). Financial reporting quality and dividend policy: New evidence from an international level. International Review of Financial Analysis, 80, 102026.
71. Von Eije, H. ve Megginson, W. L. (2008). Dividends and share repurchases in the European Union. Journal of Financial Economics, 89(2), 347-374.
72. Wang, M. H., Ke, M. C., Liu, D. Y., ve Huang, Y. S. (2011). Dividend policy and the life cycle hypothesis: Evidence from Taiwan. The International Journal of Business and Finance Research, 5(1), 33-52.
73. Warr, R. S., Elliott, W. B., Koëter-Kant, J., ve Öztekin, Ö. (2012). Equity mispricing and leverage adjustment costs. Journal of Financial and Quantitative Analysis, 47(3), 589-616.