A Reexamination of Whether U.S. Bank Holding Companies Actual Buyback Shares
Date Issued
2008
Date
2008
Author(s)
Tien, Yen-Rong
Abstract
At the beginning of 1990s, bank holding companies’ repurchase activities are at a torrid pace. Thus, it becomes increasingly essential to probe into what reasons motivate bank holding companies to engage in share repurchase activities. Prior literatures concentrate only on one or two motives and primarily focus on non-financial firms. Therefore, our study examines all possible motives for actual share repurchases, using a sample of 380 U.S. bank holding companies over the period from 1994 to 2006. All of the motives are simultaneously captured and analyzed by binary Logit regression. We find that banks’ actual repurchase activities are obviously influenced by the greater total capital adequacy ratio they have; the greater potential takeover threats they face; the larger free cash flow they possess; the less growth opportunities they own, and the better future economic prospects they face.
Subjects
Share Repurchase
Bank Holding Company
Substation Hypothesis
Undervaluation Hypothesis
Capital Adequacy Regulation
Takeover Hypothesis
Free Cash Flow
Business Cycle
Accounting Loan Default Variables
Loan Composition
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ntu-97-R95722043-1.pdf
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