{"author":{"id":"121525639","location":"INSEAD, Finance Department","name":"Urs Peyer","seoDescription":"","slug":"urs-peyer"},"authorSources":[{"id":"121525649","lede":"\"We document the consequences of open market share repurchases in a global setting, using over 20,000 announcements from 32 countries. Non-U.S. buybacks are associated, on average, with smaller announcement returns, and larger long-term excess returns. Governance quality matters: both short term and long term excess returns are positively related to country governance quality. The hypothesis that managers buy back shares to take advantage of an undervalued stock price explains long run returns around the world: long term returns are positively related to an undervaluation index (Peyer and Vermaelen, RFS 2009). In contrast to U.S. buybacks, however, they are unrelated to subsequent takeover activity or takeover risk. We also find strong evidence that long run excess returns in the U.S. are partly driven by the benefits from a reduction in agency costs of free cash flow. Finally, shareholders are better off when the buyback only requires board approval, rather than shareholder authorization, suggesting that the insistence of e.g. European regulators on shareholder approval as a tool for shareholder protection from buybacks is misplaced.\"","link":"https://knowledge.insead.edu/sites/www.insead.edu/files/images/1bb_around_the_world_revised_-_september_8_2015-2.pdf","slug":"buybacks-around-the-world","kind":"Academic Paper","title":"Buybacks Around the World","year":"2015-01-01","researchers":[{"id":"121525635","location":"Tilburg University","name":"Alberto Manconi","seoDescription":"","slug":"alberto-manconi"},{"id":"121525639","location":"INSEAD, Finance Department","name":"Urs Peyer","seoDescription":"","slug":"urs-peyer"},{"id":"121525646","location":"INSEAD, Finance Department","name":"Theo Vermaelen","seoDescription":"","slug":"theo-vermaelen"}]}],"sourceIds":["121525649"],"authorSourcesInsights":[{"id":"121525652","lede":"The global, non-US total number of stock buybacks was 9,034. Next closest was Canada, with 2,298.","slug":"between-1998-2014-germany-had-210-stock-buybacks-to-the-us-s-11-096","title":"Between 1998 - 2014, Germany had 210 stock buybacks to the US's 11,096.","showTitleAsQuote":false,"epistemicStatus":"fact","reports":[{"id":"69359365","title":"Codetermination","slug":"codetermination"}],"tags":[{"slug":"stock-buybacks","name":"Stock Buybacks","id":"121525245","lede":"

Stock buybacks are the practice of repurchasing company shares on the open market, reducing the outstanding number of shares, thereby increasing share price.

\n","ledeExcerpt":"Stock buybacks are the practice of repurchasing company shares on the open market, reducing the outstanding number of shares, thereby increasing share price.","featured":null},{"slug":"neoliberalism","name":"Neoliberalism","id":"118560604","lede":"

Neoliberalism is a school of thought that began taking shape with the formation of The Mont Pelerin Society in the 1940's. It rose to power in the US in the 1980's, with tenets including: free trade benefits all; the government's role in the economy should remain confined to addressing market failures rather than pursuing proactive industrial policy; social benefits should be tied to work requirements; public services should be privatized; industry and finance should be maximally deregulated; stock market prices are accurate signals of all relevant information; deficits invariably lead to inflation; the primary role of indepenedent central banks is to fight inflation; and that taxes invariably discourage work, entrepreneurship, and growth.

\n\n

While the 2020 Biden administration is often suggested as marking the end of neoliberalism's singular hold over policymaking, the question remains: what comes next?

\n","ledeExcerpt":"Neoliberalism is a school of thought that began taking shape with the formation of The Mont Pelerin Society in the 1940's. It rose to power in the US in the 1980's, with tenets including: free trade benefits all; the government's role in the economy should remain confined to addressing market failures rather than pursuing proactive industrial policy; social benefits should be tied to work requirements; public services should be privatized; industry and finance should be maximally deregulated; stock market prices are accurate signals of all relevant information; deficits invariably lead to inflation; the primary role of indepenedent central banks is to fight inflation; and that taxes invariably discourage work, entrepreneurship, and growth.\n\nWhile the 2020 Biden administration is often suggested as marking the end of neoliberalism's singular hold over policymaking, the question remains: what comes next?","featured":null},{"slug":"corporate-governance","name":"Corporate Governance","id":"69359562","lede":"

Corporate governance describes "the processes, structures, and mechanisms that influence the control and direction of corporations" (Greg Shailer, 2018).

\n\n

"Control" refers to how stakeholders and other external groups influence those who are responsible for decision-making, while "direction" refers to the guidance and management of the corporation.

\n","ledeExcerpt":"Corporate governance describes \"the processes, structures, and mechanisms that influence the control and direction of corporations\" (Greg Shailer, 2018).\n\n\"Control\" refers to how stakeholders and other external groups influence those who are responsible for decision-making, while \"direction\" refers to the guidance and management of the corporation.","featured":null},{"slug":"short-termism","name":"Short-Termism","id":"118562815","lede":"

"Short-Termism" is a term often used to critique an excessive focus on short-term results at the expense of long-term interests. For example, in corporate contexts, this can mean making decisions that maximize quarterly revenues at the expense of long-term firm interests or value-creation.

\n","ledeExcerpt":"\"Short-Termism\" is a term often used to critique an excessive focus on short-term results at the expense of long-term interests. For example, in corporate contexts, this can mean making decisions that maximize quarterly revenues at the expense of long-term firm interests or value-creation.","featured":null},{"slug":"growth","name":"Growth","id":"23932836","lede":"

We define growth as the expansion of wealth in society; growth is about generating a "a bigger pie".

\n\n

Amidst debates over the merits of continued growth, we begin with the idea that all else equal, a society with growth, with more wealth, is preferable to one with less. Without growth, society becomes a zero-sum distributional game: anyone's gain is another's loss. Growth (all else equal) enables shared prosperity.

\n\n

But there is broad agreement that current measures of growth, such as GDP, are inadequate to the task of providing a suitable proxy to guide further growth. Whether devising improved measures that account for missing elements such as sustainability, equity, leisure time, or digital value, or constructing altogether new proxies (OECD's Better Life Index, for example), the conversation about how best to measure, and thus drive, equitable, regenerative, socially desirable growth is a rich field of debate.

\n","ledeExcerpt":"We define growth as the expansion of wealth in society; growth is about generating a \"a bigger pie\".\n\nAmidst debates over the merits of continued growth, we begin with the idea that *all else equal*, a society with growth, with more wealth, is preferable to one with less. Without growth, society becomes a zero-sum distributional game: anyone's gain is another's loss. Growth (all else equal) enables shared prosperity.\n\nBut there is broad agreement that current measures of growth, such as GDP, are inadequate to the task of providing a suitable proxy to guide further growth. Whether devising revised measures, such as Tyler Cowen's notion of wealth plus\" (GDP, plus measures of leisure time, household production, and environmental considerations), or constructing altogether new proxies (OECD's 'Better Life Index), the conversation about how best to measure, and thus drive, equitable, regenerative, socially desirable growth is a rich field of debate.","featured":true}],"sources":[{"id":"121525649","lede":"\"We document the consequences of open market share repurchases in a global setting, using over 20,000 announcements from 32 countries. Non-U.S. buybacks are associated, on average, with smaller announcement returns, and larger long-term excess returns. Governance quality matters: both short term and long term excess returns are positively related to country governance quality. The hypothesis that managers buy back shares to take advantage of an undervalued stock price explains long run returns around the world: long term returns are positively related to an undervaluation index (Peyer and Vermaelen, RFS 2009). In contrast to U.S. buybacks, however, they are unrelated to subsequent takeover activity or takeover risk. We also find strong evidence that long run excess returns in the U.S. are partly driven by the benefits from a reduction in agency costs of free cash flow. Finally, shareholders are better off when the buyback only requires board approval, rather than shareholder authorization, suggesting that the insistence of e.g. European regulators on shareholder approval as a tool for shareholder protection from buybacks is misplaced.\"","link":"https://knowledge.insead.edu/sites/www.insead.edu/files/images/1bb_around_the_world_revised_-_september_8_2015-2.pdf","slug":"buybacks-around-the-world","kind":"Academic Paper","title":"Buybacks Around the World","year":"2015-01-01","researchers":[{"id":"121525635","location":"Tilburg University","name":"Alberto Manconi","seoDescription":"","slug":"alberto-manconi"},{"id":"121525639","location":"INSEAD, Finance Department","name":"Urs Peyer","seoDescription":"","slug":"urs-peyer"},{"id":"121525646","location":"INSEAD, Finance Department","name":"Theo Vermaelen","seoDescription":"","slug":"theo-vermaelen"}]}]}]}