Corporate Share Repurchases in Sweden : Managerial motivation and timing

Current study focuses on examining the determinants of share repurchases in Swedish firms listed on NASDAQ OMX Nordic during the period 2000-2011. It tests the variety of different hypotheses that were previously empirically shown to be associated with share repurchases in other countries (primarily U.S.). However, as expected, the majority of these hypotheses do not hold in case of Sweden which might be explained by the specificity of Swedish corporate governance system. Thus, unlike the results of many empirical researches based on U.S. data evidence was found that companies repurchase shares not at the expense of declining dividends but rather on top of dividends, hence rejecting the substitution hypothesis and supporting the view on these payout methods as complements. As for analysis of Swedish managers' timing skills of share repurchases, it indicates that managers have the ability to time their share repurchasing decisions with the cost-minimization purpose and support their own stock liquidity by repurchasing share during the capital market downturns.