Assessing the impact of market logic and long-term strategic plans of top management in share buyback decisions

Istemi Demirag, Thanamas Kungwal, Yassine Bakkar

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This paper investigates stakeholders' perspectives of share buybacks in the context of time-horizons of investment decisions and strategy.

We use in-depth interviews with stakeholders from eight listed UK firms as well as examine their publicly available data.

Findings suggest that share buybacks involve a wide range of stakeholders' rational interests and long-term management perspectives as they enable firms to strategise operational plans towards their long-term corporate goals.

Research limitations/implications
The findings are based on interviews with a small number of share buyback firms and the findings, therefore, may not be generalised to all firms.

Practical implications
The results show that share buybacks may be part of the long-term interests of firms and not necessarily used as part of short-term EPS increases as suggested in the extant literature.

The findings contribute to the literature on corporate pay-out policies in the context of short-term financial objectives vs long-term strategic objectives of stakeholders. They show that share buybacks can be an important part of firms' long-term strategic considerations.
Original languageEnglish
JournalManagerial Finance
Early online date06 Dec 2021
Publication statusEarly online date - 06 Dec 2021


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