Share Repurchases and Board Independence

Share repurchases have come under criticism as they may be used for earnings management and take capital away from productive investment. However, share can also reduce the agency costs of free cash flow offset dilution current shareholders. Whether firms engage in good or manipulative crucially hinge on quality corporate governance. Using UK firm panel data, we study effect independent directors repurchase policies. Our results indicate that board independence increases propensity to repurchases. Moreover, attenuates harmful employment growth. approach exploits passage a governance reform which provided unique opportunity tease out causal impact findings advocate favor more active involvement payout