What is the impact of share repurchase? Evidence from the US equity market

Abstract

This paper analyses the impact of share repurchase and studies its drawbacks. In the US equity market, the most significant source of demand for equities has always been repurchased. The assessment, therefore, covers the US equity market. The result suggest the potential share repurchase restrictions would likely have the implications of slow growth in EPS, boosting cash spending on dividends, M&A, and debt payouts, widening trading ranges, de- creasing demand for shares and lower corporate valuations. The summaries that the share repurchase is a good signal to increase the stock price and enhance investor confidence. However, once the company becomes too obsessed with share repurchase, it may cause the real economy to miss long-term growth opportunities due to insufficient investment.