Do Peer Firms Truly Affect Corporate Repurchase Decision?

Share repurchases;Peer effects;Two-stage regressions;658

경영대학 경영학과 ;

University:서울대학교 대학원

关键词: Share repurchases;    Peer effects;    Two-stage regressions;    658;   

Others  :  http://s-space.snu.ac.kr/bitstream/10371/124741/1/000000141929.pdf

美国|英语

来源: Seoul National University Open Repository

【 摘 要 】

This paper examines whether peer firms’ repurchase activity truly affectsother firms’ decisions to repurchase as shown in a previous study. I find thatthe probability of a firm to repurchase goes up as the intensity of its peer firms’repurchase activity increases in the reduced-form regressions. However, thesignificant influence of peer firms on other firms’ repurchase decisionsdisappears in the second stage when the intensity of peer firms’ repurchaseactivity is instrumented by a firm-specific instrumental variable, peer firmaverage idiosyncratic risk. On the other hand, when I instrument the intensityof peer firms’ repurchase activity by peer firm average systematic risk, theinstrumented variable shows its positive and significant relation with theprobability of the firm in question to repurchase. These findings suggest thatthe previous finding, a significant influence of peer firms on other firms’decisions to repurchase, is possibly not caused by peer effects, but bycommon shocks on the same industry.