A research seminar by Dr. Subramanian R. Iyer, Associate Professor, Anderson School of Management at The University of New Mexico was held on July 08, 2022.
Topic – The Politics of Share Repurchases: What does the evidence say?
Abstract – This seminar is based on the research paper titled ‘The Politics of Share Repurchases: What does the evidence say?’ authored by Dr. Subramanian R. Iyer and Dr. Ramesh P. Rao. Below is the abstract of the paper. This paper examines several popular criticisms levelled against corporate repurchases, especially by politicians. We find that these criticisms, for the most part, do not stand up to the rigour of empirical analysis. Our results indicate that stock repurchases do not cause firms to become less resilient. We find quite the opposite, i.e., repurchasing firms have adequate cash resources to meet their pro forma needs compared to non-repurchasing firms. This holds even when the firms experience unexpected financial distress. We also find that repurchases do not come at the expense of employee welfare. We document that repurchases do not reduce hiring or employee expenses. We also do not find that repurchases come at the expense of employee satisfaction or at the cost of underfunded pension contributions. Finally, we do not find that repurchases promote more aggressive CEO compensation.