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Share Repurchases and Corporate Sustainability: Evidence from South Africa

Author

Listed:
  • Frank Mouton

    (School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa)

  • Carly Londt

    (School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa)

  • Gerhard Cloete

    (School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa)

  • Wynand Hattingh

    (School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa)

  • Gretha Steenkamp

    (School of Accountancy, Stellenbosch University, Stellenbosch 7600, South Africa)

Abstract

This study examined the relationship between share repurchases and corporate sustainability in South Africa during 2011–2019. According to stakeholder theory, companies may feel a sense of obligation to not only distribute returns to shareholders through share repurchases but also to other stakeholders by investing in environmental, social or governance (ESG)-related projects. Our study, the first of its kind in the context of an emerging economy, reported a positive relationship between share repurchases and corporate sustainability in South Africa (proxied using ESG scores)—specifically social scores. The emphasis on the social, rather than the environmental, dimensions of ESG might result from the emerging economy context, where several societal problems are experienced. The results support stakeholder theory, but increased disclosure pertaining to the social dimension of ESG in years when share repurchases are executed might also provide evidence of ‘social washing’ (when companies employ their integrated report disclosures to paint an overly positive picture of their social responsibility initiatives).

Suggested Citation

  • Frank Mouton & Carly Londt & Gerhard Cloete & Wynand Hattingh & Gretha Steenkamp, 2024. "Share Repurchases and Corporate Sustainability: Evidence from South Africa," IJFS, MDPI, vol. 12(2), pages 1-15, June.
    • Handle: RePEc:gam:jijfss:v:12:y:2024:i:2:p:57-:d:1417302
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    References listed on IDEAS

    as
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    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. Tina He & Wilson Li & Gordon Tang, 2012. "Dividends Behavior in State- Versus Family-Controlled Firms: Evidence from Hong Kong," Journal of Business Ethics, Springer, vol. 110(1), pages 97-112, September.
    4. Gretha Steenkamp & Nicolene Wesson, 2020. "Post-recession share repurchase behaviour by JSE-listed companies: transparent or not?," Journal of Accounting in Emerging Economies, Emerald Group Publishing Limited, vol. 10(3), pages 465-486, July.
    5. repec:bla:jfinan:v:59:y:2004:i:2:p:651-680 is not listed on IDEAS
    6. Manconi, Alberto & Peyer, Urs & Vermaelen, Theo, 2019. "Are Buybacks Good for Long-Term Shareholder Value? Evidence from Buybacks around the World," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 54(5), pages 1899-1935, October.
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