Signaling and Substitution Hypotheses in Malaysian Share Repurchases
研究马来西亚企业股票回购的管理动机，发现回购主要用于传递低估信号和应对现金流增加，而非替代股利，且管理层持股显著影响回购决策。
There is an increasing trend of firms undertaking share repurchases in Malaysia, yet limited studies on repurchase activities have been published. This study attempts to examine managerial mot ives for repurchase in Malaysia using signaling and substitution hypotheses. Unlike firms in western countries, firms in Malaysia are bound by strict ru les and regulations before embarking on repurchases, thus it is argued that motives for share repurchases would be different fro m those of the developed markets. The results of this study are consistent with signaling hypothesis where Malaysian firms repurchase shares partly to signal undervaluation and better operating performance. They also buy back shares whenever there is an increase in cash flo ws. Ho wever, there is no evidence to support that these firms bought back shares to substitute dividend payments as documented by studies from western countries. In fact, repurchases are used to complement dividends. Further evidence shows that managerial ownership has significant influence on firms' repurchase decisions.