The determinants of actual share buy-back activity in Australia.

Marchesi, Damien. (2003). The determinants of actual share buy-back activity in Australia. Honours Thesis, School of Business, The University of Queensland.

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Author Marchesi, Damien.
Thesis Title The determinants of actual share buy-back activity in Australia.
School, Centre or Institute School of Business
Institution The University of Queensland
Publication date 2003
Thesis type Honours Thesis
Total pages 104
Language eng
Subjects 1503 Business and Management
Formatted abstract
This study uses a Tobit regression to compare the effect that two groups of variables have on the magnitude of shares repurchased on-market by Australian listed firms, the state variables in existence at the time a buy-back is announced and the change variables that vary dynamically throughout the life of a buy-back program. The heavy regulation of buy-backs in Australia is in stark contrast to the voluntary disclosure environment in the USA, and makes it an ideal setting in which to test the research question.

Wald tests reveal that change variables are more likely to add explanatory power over and above a multivariate intercept than are state variables. Of the individual hypotheses that compliment the comparison of state and change variables, the strongest and most interesting finding is that executive directors with substantial option holdings (relative to their interest in ordinary shares) are more likely to buy-back common stock on-market. Executive directors appear to substitute share repurchases for dividends in order to maximise the value of their stock option compensation. This key finding is robust across all specifications of the model.

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Created: Tue, 16 Nov 2010, 12:38:38 EST by Muhammad Noman Ali on behalf of The University of Queensland Library