Firms Motive in Stock Repurchase

Anggi Dermawan Purba

Abstract


This research examined the motives of stock repurchase, especially the cash distribution, investment and corporate capital structure motives (increasing leverage ratio). The sample was selected using a purposive sampling method with certain criteria, namely companies listed on the Indonesia Stock Exchange in 2016-2020 and repurchasing stocks between 2016 and 2020. Data analysis in this study used multiple linear regression. This research found that the motive for cash distribution is the main motive for the company to repurchases their stock because this is in accordance with the company's goal of maximizing stockholder wealth. Stock repurchase was done for investment motives because the company has excess cash and does not have other profitable investment opportunities. This study proves that the motive to increase the leverage ratio is also one of the reasons companies repurchases their stocks. Companies with leverage ratio below the target tended to repurchases their stock.


Keywords


Stock Repurchase, Cash Distribution, Investment, Leverage

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References


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