Please use this identifier to cite or link to this item:
Full metadata record
|dc.description.abstract||Using data from bank holding company regulatory reports, we examine the relationshipbetween stock repurchases and financial performance for a large sample of bank holding companies over the years 1987 to 1998. The primary result is that higher levels of repurchases in one year are associated with higher profitability and a lower share of problem loans in the subsequent year. This finding is robust to several different ways of measuring share repurchase activity. Our results appear to be driven primarily by bank holding companies with publicly traded stock, especially those companies whose stock is traded on major exchanges. The finding that higher repurchases are followed by better financial performance is consistent with at least two distinct behavioral hypotheses. First, bank holding company managers may opt to return excess funds to shareholders when they have limited outside investment opportunities. Alternatively, managers may choose to increase repurchases when they have private information suggesting that the future profitability of the bank is likely to be strong. We find evidence suggesting that the repurchase-performance link may be driven by different factors for different types of bank holding companies. In particular, the evidence is consistent with the first hypothesis for banks traded on major stock exchanges, but only weakly supports this explanation for smaller, closely held companies.||en_US|
|dc.publisher|||aFederal Reserve Bank of New York |cNew York, NY||en_US|
|dc.relation.ispartofseries|||aStaff Report, Federal Reserve Bank of New York |x123||en_US|
|dc.title||How do stock repurchases affect bank holding company performance?||en_US|
Files in This Item:
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.