Ownership Structure and Open Market Stock Repurchases in France

Ginglinger, Édith; L’Her, Jean-François

doi:10.2139/ssrn.304184

Cited by 32 publications

(54 citation statements)

References 32 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Although this is not conclusive evidence that differences in corporate governance institutions drive these differences, our results on how firm-level corporate governance arrangements affect the volume of stock repurchases in such a way that firms whose corporate governance arrangements are more similar to those of US firms (relatively less ownership concentration) and with heightened exposure to US or UK stock markets (through cross listing) repurchase more stock, support this interpretation. This is in line with Liljeblom and Pasternack (2006), who show that foreign ownership increases stock repurchases among Finnish firms, and with Ginglinger and L'Her (2006), who show that stock-price reactions to share buybacks by French firms are more positive if foreign ownership is high and there is no dominating controlling shareholder. Another finding that is consistent with the view that national corporate governance institutions partially drive these differences is that the model, consisting mostly of variables linked to hypotheses that had received previous support by US data, fits firms with more dispersed ownership a lot better (in terms of R 2 ) than firms with a dominant controlling owner, which are common in the Swedish (Agnblad et al, 2001), but not in the US (Weimer & Pape, 1999) context.…”

Section: Discussionsupporting

confidence: 87%

“…Ownership structure appears also to be linked to stock repurchases. Liljeblom and Pasternack (2006) show that foreign ownership increases stock repurchases among Finnish firms, and Ginglinger and L'Her (2006) show that the market reaction to announcements of stock repurchase programs vary with ownership structure in France, such that the market reacts more positively when the firm has large foreign ownership and when no single shareholder can dominate decision making and thus use repurchases for minority expropriation purposes. The latter is consistent with Jiraporn's (2006) findings on the positive link between shareholder protection and repurchases; however, Swedish firms, though certainly often dominated by controlling owners, exhibit very limited minority expropriation (Nenova, 2003;Stafsudd, 2009), so this effect may not be as strong in the Swedish context.…”

Section: The Impact Of Firm-level Corporate Governance Differences Onmentioning

confidence: 99%

“…One potential reason for why controlling shareholders may want to repurchase stock is to consolidate their ownership stake (cf. Ginglinger & L'Her, 2006). By letting the firm repurchase stock and not selling privately held stock, the relative stake of the controlling owner increases.…”

Section: Not Supportedmentioning

confidence: 99%

See 2 more Smart Citations

The Effect of Corporate Governance on Stock Repurchases: Evidence from Sweden

Jansson

Larsson-Olaison

2010

Corporate Governance

View full text Add to dashboard Cite

Manuscript Type: EmpiricalResearch Question/Issue: The paper examines whether corporate governance differences affect firms' stock repurchasing behavior. Previous hypotheses on stock repurchases, well-supported by US data, are based on assumptions of managerial autonomy that might not be descriptive in corporate governance systems characterized by influential controlling shareholders such as the Swedish. Firm-level corporate governance arrangements may also affect firms' incentives to repurchase stock. Research Findings/Insights: Stock-repurchasing patterns among Swedish firms differ from those previously observed among US firms. The findings indicate that Swedish firms do not repurchase stock to distribute excess cash, signal undervaluation, or fend off takeovers. Stock repurchases are made in addition to dividends and thus do not substitute for them. Firm-level corporate governance arrangements directly affect stock repurchasing behavior. Firms without a dominant controlling owner seem to use stock repurchases to increase leverage. The existence of a dominant controlling shareholder diminishes the propensity for stock repurchases, while cross listing on a US or UK stock market increases that propensity. Theoretical/Academic Implications: The findings suggest that corporate governance differences affect stock repurchasing behavior. The agency-theoretical view of the firm, on which the leading hypotheses on stock repurchases are based, accurately predicts stock repurchases only in certain institutional and governance settings. Practitioner/Policy Implications: The study suggests that differences in national and firm-level corporate governance must be taken into account in order to accurately assess outcomes of regulatory reforms and/or harmonization attempts.

show abstract

Section: Discussionsupporting

confidence: 87%

Section: The Impact Of Firm-level Corporate Governance Differences Onmentioning

confidence: 99%

See 1 more Smart Citation

The Effect of Corporate Governance on Stock Repurchases: Evidence from Sweden

Jansson

Larsson-Olaison

2010

Corporate Governance

View full text Add to dashboard Cite

show abstract

“…As with all ratios, there are two ways to increase their financial profitability: decrease the denominator or increase the numerator. Regarding the denominator, the company can lower the capital employed by buying back shares, an option which is frequently done by listed companies (Ginglinger & L'Her (2006)). The second alternative is to increase the net result, which is the difference between total income and total costs.…”

Section: Effects Of the Ownership Structure On Human Resource Managementmentioning

confidence: 99%

Ownership Structure and Human Resources Strategy: The Case of Spanish Manufacturing Firms

Garbe

García‐Cestona

2012

Proceedings

View full text Add to dashboard Cite

Using panel data from the Spanish Ministry of Science and Technology from 1999 to 2007, this paper is the first to analyze the relationship between ownership structure and the Human Resources strategy in Spain. One of our key findings is that two stable HR strategy equilibria exist: a high commitment strategy, with firms, paying higher wages and spending more on training than their competitors, and a low commitment strategy. We find that corporate and foreign blockholders increase the probability that firms follow a high commitment HR strategy, while family ownership, if combined with family management is negatively related to the choice of a high commitment strategy. However, we find that blockholders may mitigate this negative effect by giving family firms access to new technologies and strategies. Our results show that a high commitment HR strategy is desirable for most firms, since it leads to higher productivity and profitability in the long run. However, some firms may prefer a low commitment strategy, if it is more consistent with the firm's overall strategy.

show abstract

“…Jagannathan and Stephens (2003) find that firms with infrequent stock repurchases have lower institutional ownership and higher insider ownership than those with frequent repurchases. Moreover, Ginglinger and L'her (2006) suggest that ownership structure as a corporate governance indicator is an important factor for the decision to pursue a stock repurchase and the market valuation of the stock repurchase. This view is consistent with the literature, which shows that ownership structure has a significant impact on the degree of agency problems (Denis, Denis, & Sarin, 1997;Ang, Cole, & Lin, 2000;Singh and Davidson III, 2003).…”

Section: Introductionmentioning

confidence: 99%

Frequent Stock Repurchases, False Signaling, and Corporate Governance: Evidence from Korea

Han

Lee²,

Song

2014

Corporate Governance

View full text Add to dashboard Cite

Manuscript Type: EmpiricalResearch Question/Issue: We examine the relation between stock repurchases and their potential false signaling of undervaluation using unique Korean data. Research Findings/Insights: We find that the firms that repurchase stocks frequently are less undervalued and have lower post-announcement operating performance than firms that repurchase stocks infrequently. We further find that agency cost and industry-adjusted Tobin's Q of frequent repurchase firms negatively affect abnormal returns from the repurchase announcement. Corporate governance, especially ownership structure and board independence, affects the probability of frequent signaling. Theoretical/Academic Implications: Our results suggest that the main motivation for frequent stock repurchases is likely to be false signaling, and that corporate governance can mitigate false signaling caused by agency cost. Practitioner/Policy Implications: Frequent stock repurchases are not necessarily motivated by firm undervaluation. Rather, the degree of agency problems and managers' abuse of information asymmetry tend to increase the frequency of stock repurchases. Therefore, frequent stock repurchases are associated with false signaling by managers; this false signaling can be lowered through better corporate governance. This finding supports the monitoring effect of corporate governance systems.

show abstract

Ownership Structure and Open Market Stock Repurchases in France

Cited by 32 publications

References 32 publications

The Effect of Corporate Governance on Stock Repurchases: Evidence from Sweden

The Effect of Corporate Governance on Stock Repurchases: Evidence from Sweden

Ownership Structure and Human Resources Strategy: The Case of Spanish Manufacturing Firms

Frequent Stock Repurchases, False Signaling, and Corporate Governance: Evidence from Korea

Contact Info

Product

Resources

About