In search of stock repurchases determinants in listed Indonesian firms during regulatory changes

This research is aimed to investigate the role of dividend premium and share repurchases in influencing the companies’ dividend policy. The theory used in this research is catering theory. This research uses secondary data obtained by using observation method. The data source in this research is the annual reports of manufactur companies listed on the Indonesia Stock Exchange (IDX) for the period 2017 to 2019. The sample were selected using purposive sampling method, with a total of 98 companies. This research uses analysis double linear regression test using SPSS version 20 software. The result of this research indicate that dividend premium has a positive and significant effect on dividend policy. Share repurchases has a negative and significant effect on dividend policy

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“…Jika terdapat share repurchases, dinilai 1, tetapi jika tidak terdapat share repurchases, dinilai 0 (Moin et al, 2020).…”

Section: Share Repurchasesunclassified

Kebijakan Dividen Dalam Perspektif Catering Theory

Rustan

Daromes

Lukman

et al. 2022

balance

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“…Hu et al (2020) revealed that board reforms reduce crash risk by improving financial transparency and enhancing investment efficiency. In Indonesia, sub-optimal financial positions play a role in corporate share repurchase decisions, while the enactment of the regulations has a significant effect on firms undertaking share repurchase programs (Moin et al , 2020). In China, regulations that promote the efficiency of share prices also play an important role in controlling stock prices (He and Fang, 2019).…”

Section: Literature Review and Hypothesismentioning

confidence: 99%

Does intellectual capital have any influence on stock price crash risk?

Probohudono

Pratiwi

Rochmatullah

2021

JIC

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PurposeThis paper explores the influence between intellectual capital (IC) and the risk of stock price crashes by using company performance as an intervening variable.Design/methodology/approachThis study empirically analyzes the impact of the efficiency of IC on stock price crash risk using a sample size of 152 companies listed on the Indonesia Stock Exchange (IDX) during 2018. To test the research hypotheses, regression analysis and path analysis were applied. In addition, the researchers added exploration to several studies to strengthen the results of this study.FindingsThis study’s findings indicate that investors' optimistic (pessimistic) sentiment regarding stock price volatility has obscured aspects of the financial performance of listed companies. This finding implies that investor sentiment has dominated influence on stock price crash risk so that the aspects of IC are obscured.Originality/valueThis research provides new information that IC disclosure in the stock market needs to include knowledge of the volatility of stock prices in order to reveal stock price crash risk.

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“…Other studies mention takeover deterrence and dilution minimization incentives for firms to buyback stocks, such as Bagwell (1991aBagwell ( , 1991b, Brav et al (2005), Kahle (2002), and Bens et al (2003). In terms of an emerging market, Moin et al (2020) examine the agency cost of free cash flows in the context of share repurchase programs, particularly in Indonesia. The authors investigate the effects of various sub-optimal financial decisions, such as excess cash holdings and leverage positions, on share repurchase decisions.…”

Section: Literature Reviewmentioning

confidence: 99%

Incomplete Share Repurchase Programs in Vietnam: Completion Rates and Short-Term Returns

Cao

Nguyễn

Nguyen

et al. 2020

IJFS

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Stock repurchases have become a preferred method of distributing cash to stockholders. However, given the high level of information asymmetry and weak corporate governance as well as poor investor protection in Vietnam, many Vietnamese firms use stock repurchases as a tool to manipulate stock prices in the market. Using event study methodology and Tobit regression models, this study examines the stock price behaviors surrounding the event dates and the impact of earnings management activities prior to the stock repurchases on the completion of repurchase announcements in Vietnam. The results show that earnings management practices prior to stock repurchase programs, the percentage of intended buyback shares, and CEO characteristics have a significant impact on the completion of these repurchase programs. Moreover, most of the windows surrounding the event dates do not have any significant abnormal movement of the stock prices. A plausible explanation is that, due to weak corporate governance and poor investor protection, Vietnamese firms send lots of misleading signals through various corporate activities, especially stock repurchase programs. Thus, these signals have less meaning to investors.

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In search of stock repurchases determinants in listed Indonesian firms during regulatory changes

Cited by 12 publications

References 60 publications

Kebijakan Dividen Dalam Perspektif Catering Theory

Kebijakan Dividen Dalam Perspektif Catering Theory

Does intellectual capital have any influence on stock price crash risk?

Incomplete Share Repurchase Programs in Vietnam: Completion Rates and Short-Term Returns

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