Effects of financial constraints and product market competition on share repurchases

This study explores the importance of financial constraints and product market competition on share repurchase decision. We find that financially constrained firms are more likely to conduct debt-financed repurchases. Financially unconstrained firms, however, tend repurchases only when debt conditions favourable. also level industry is a significant factor behind managers’ decisions. High (low) forces undervalued reduce (increase) agency costs free cash flows from overvalued financing. The implication in high-competition industries disburse excess through this effect strongest periods outside crises.