Share Repurchases and Investment Policies

Research

21 Pages

This study examines the claim that share repurchases lead to reductions in real investments and finds no support for the claim that repurchases lead to lower real investments.

Key Takeaways

Buybacks in Focus: US share repurchases have surpassed $900 billion per year and several lawmakers and political candidates have expressed an interest in curtailing or eliminating such practices.
False Narrative: The results reject the claim that managers reduce real investments in human or physical capital in order to conduct share repurchases.
Analyst Adjustments: Financial analysts do not forecast reductions in future capital expenditures following repurchase announcements.
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