Article: The decision to repurchase shares: A cash flow story Journal: Journal of Business and Management (JBM) 2003 Vol.9 No.2 pp.99 - 123 Abstract: Utilizing classification system developed by Helfer (1982) and Gentry, Newbold and Whitford (1985, 1990), this paper presents a summary of changes in the cash flow position of companies embarking on a share repurchase strategy. The results from the adoption of a repurchasing strategy show that subsequent to the repurchase, net working capital flow components and net operating flow get smaller while net investment flow increases. There also exists a clear cash flow effect leading up to the announcement period as well as reduced reliance on external funds. The findings are of interest to corporate executives, credit analysts, investors, and other outside parties in evaluating the strategic and operational change occurring in firms who choose to repurchase shares. The results are also consistent with firms using share repurchase programs as a way of adjusting payouts. Inderscience Publishers - linking academia, business and industry through research

Title: The decision to repurchase shares: A cash flow story

Authors: John P. Evans; Robert T. Evans; James A. Gentry

Addresses: Author address listing can be found in the "About the Authors" section at the end of the article.

Abstract: Utilizing classification system developed by Helfer (1982) and Gentry, Newbold and Whitford (1985, 1990), this paper presents a summary of changes in the cash flow position of companies embarking on a share repurchase strategy. The results from the adoption of a repurchasing strategy show that subsequent to the repurchase, net working capital flow components and net operating flow get smaller while net investment flow increases. There also exists a clear cash flow effect leading up to the announcement period as well as reduced reliance on external funds. The findings are of interest to corporate executives, credit analysts, investors, and other outside parties in evaluating the strategic and operational change occurring in firms who choose to repurchase shares. The results are also consistent with firms using share repurchase programs as a way of adjusting payouts.

Keywords: Cash flow; share repurchase; corporate strategy; investment flow; operational change.

DOI: 10.1504/JBM.2003.141103

Journal of Business and Management, 2003 Vol.9 No.2, pp.99 - 123

Published online: 05 Sep 2024 *

Title: The decision to repurchase shares: A cash flow story

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