Can Buybacks be a Product of Shorter Shareholder Horizons?
- Topics:
- Strategic Management Tools
- Tags:
- Buyback,
- Dividend,
- Finance,
- Financial Accounting,
- Financial Planning,
- INSEAD,
- Investor,
- Shareholder
- Source:
- INSEAD
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Overview: This paper examines how shareholder investment horizons influence firms' payout decisions. It finds that U.S. firms held by short-term institutional investors have a higher propensity to buybacks shares instead of using dividends. Firm managers seem to respond to the preferred payout policy of investors in their shareholder base. Share buybacks are used by if managers want to appease short-term oriented shareholders, while firms pay dividends if their stock is mostly held by long-term investors who have less need to liquidate their investment and may have a better tax treatment with dividends.
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Format: PDF | Size: 753KB | Date: Oct 2004 | Pages: 37
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