A Reexamination of Whether U.S. Bank Holding Companies announce to Repurchase Share
Date Issued
2008
Date
2008
Author(s)
Tseng, Wen-Yu
Abstract
A sample of 380 U.S. bank holding companies from 1993 to 2006 is collected to study whether the U.S bank holding companies announce to repurchase shares. In addition to previously-mentioned factors (or hypotheses): substitution hypothesis, risk, undervaluation hypothesis, size, takeover deterrence hypothesis, optimal capital ratio hypothesis, free cash flow hypothesis, and investment opportunities, this study come up with three new factors: the accounting loan default variables, the loan composition and the business cycle. The empirical results show that internal factors such as, a bank holding company’s accounting loan default variables, loan composition, dividend payout, risk, size, free cash flow, and investment opportunities, and external factors like business cycle and takeover threat, both have influence on the bank holding companies’ share repurchase announcements, while no significant evidence to support the undervaluation hypothesis and optimal capital ratio hypothesis.
Subjects
share repurchase announcement
bank holding company
accounting loan default variables
loan composition
business cycle
substitution hypothesis
risk
undervaluation hypothesis
size
takeover deterrence hypothesis
optimal capital ratio hypothesis
free cash flow hypothesis
investment opportunities
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