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Share repurchases and firm innovation

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  • Lily Nguyen
  • Le Vu
  • Xiangkang Yin

Abstract

We examine whether corporate decisions such as share repurchases influence a firm’s intangible assets and their production. We find a significantly negative relationship between share repurchases and firm innovation. The negative relationship survives all considered robustness tests. We further apply two identification strategies, namely, difference‐in‐differences analysis and instrumental variables estimation, to establish that the negative effect is causal; that is, from share repurchases to innovation.

Suggested Citation

  • Lily Nguyen & Le Vu & Xiangkang Yin, 2021. "Share repurchases and firm innovation," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 1665-1695, April.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:s1:p:1665-1695
    DOI: 10.1111/acfi.12641
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    1. Avishek Bhandari & Joanna Golden & Kenton Walker & Joseph H. Zhang, 2022. "The relationship between stock repurchase completion rates, firm reputation and financial reporting quality: a commitment‐trust theory perspective," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(2), pages 2687-2724, June.
    2. Chang, Juin-Jen & Kuo, Chun-Hung & Lin, Hsieh-Yu & Yang, Shu-Chun S., 2023. "Share buybacks and corporate tax cuts," Journal of Economic Dynamics and Control, Elsevier, vol. 151(C).

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