Share pledge and stock repurchase: The role of stock mispricing and corporate governance

IF 4.8 2区 经济学 Q1 BUSINESS, FINANCE Pacific-Basin Finance Journal Pub Date : 2024-10-15 DOI:10.1016/j.pacfin.2024.102561
Yi-Wen Chen , Xing-Yu Pan , Chu-Bin Lin , Chun-Hua Yang
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Abstract

Prior research documents a positive relation between controlling shareholders' share pledge and the probability of a stock repurchase announcement. This study investigates whether and how stock mispricing and corporate governance affect this relation. By extending the framework of Chan et al. (2018), we first show that the share pledge is not only positively related to the probability of stock repurchase but also proportionally related to the amount purchased. Moreover, for firms with shares pledged by controlling shareholders, stock overpricing and better firm-level corporate governance are associated with a lower probability of stock repurchase and less amount of stock repurchase. Additional tests show that large shareholders (not only the largest) facilitate stock repurchase once they have shares pledged. Our evidence supports the market timing theory and that better corporate governance moderates the agency problem between controlling and small shareholders.
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股票质押和股票回购:股票错误定价和公司治理的作用
先前的研究表明,控股股东的股票质押与宣布股票回购的概率之间存在正相关关系。本研究探讨了股票错误定价和公司治理是否以及如何影响这种关系。通过扩展 Chan 等人(2018)的框架,我们首先证明了股票质押不仅与股票回购概率正相关,而且与回购金额成正比关系。此外,对于控股股东质押股票的公司,股票定价过高和公司层面的公司治理较好与股票回购概率较低和股票回购金额较少相关。其他测试表明,大股东(不仅是第一大股东)一旦质押股票,就会促进股票回购。我们的证据支持市场时机理论,并证明更好的公司治理可以缓和控股股东和小股东之间的代理问题。
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来源期刊
Pacific-Basin Finance Journal
Pacific-Basin Finance Journal BUSINESS, FINANCE-
CiteScore
6.80
自引率
6.50%
发文量
157
期刊介绍: The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.
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