Strategic Satisficing? A Behavioral-Agency Perspective on Stock Repurchase Program Announcements
Academy of Management Journal, Vol. 46, pp. 160-179, 2003
Posted: 11 Jan 2002 Last revised: 14 Dec 2008
Abstract
Executives confront potentially conflicting pressures - to maximize shareholder wealth in the long term and to appease shareholders in the near term. Because near-term pressures must be addressed to preserve tenure and to realize the potential benefits of long-term strategies, executives are increasingly likely to rely on shareholder mollification initiatives. We develop a behavioral-agency theoretical framework to study how stock repurchase programs are used to help top managers appease shareholders. Analysis of 250 large U.S. firms suggests that stock repurchase programs are variously a function of information asymmetry, risky stock-based incentives, and performance expectations.
Keywords: governance, uncertainty, information assymetry, top managers, executive compensation, stock options
JEL Classification: G3, M1
Suggested Citation: Suggested Citation