Why Do Swedish Firms Repurchase Stock?: Management´s Motives and Strategic Trading
Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
The aim of this Master’s Thesis is to examine the motivations (i.e. reasons) of Swedish stock repurchases. In a Swedish context, the research considers the following: (1) a set of potential motivations for Swedish firms undertaking a stock repurchase; (2) the actual motivations for Swedish firms per se that have used the option of buy-backs; and (3) the choice between dividends and stock repurchases for Swedish firms. To obtain empirical evidence, we use a triangulation of quantitative and qualitative methods to investigate managerial attitudes towards possible motives underlying repurchase decisions. We find that Swedish firms mainly repurchase stock to alter their leverage ratio (capital structure) and to take advantage of potential undervaluation. However, firms also repurchase stock to counter the dilution effects of stock options, to finance future acquisitions, and to distribute excess cash. Finally, the overriding motivation for equal access stock repurchases is an alternative to dividends, where buy-backs are preferred due to tax efficiency reasons.
Place, publisher, year, edition, pages
IdentifiersURN: urn:nbn:se:su:diva-2219OAI: oai:DiVA.org:su-2219DiVA: diva2:191127