Managerial Incentives and Share Repurchase Decisions: Evidence from Global Board Reforms

Paul Brockman, Donglai Ning, and Yukihiro Yasuda

♦ There is considerable disagreement about whether managers conduct share repurchases primarily for the long-term benefits of shareholders or for their own short-term gains. This study addresses this important issue by applying a stacked difference-in-differences methodology to major board reforms across 36 countries. The results show that board reforms significantly increase repurchases and improve resource allocation efficiency, with the effects being most pronounced among firms with low investment opportunities and high financial flexibility. Board reforms designed to reduce agency costs lead to greater repurchasing activity. Overall, these findings support the view that share repurchases result in the long-term benefits of shareholders.

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