ABSTRACT
This chapter investigates the effects of incentives-induced buybacks on subsequent firm performance. It focuses on the third component of the model, which indicates that not all incentives-induced buybacks create shareholder value in the long run. To investigate the long-term performance of a repurchasing firm; first, the authors investigate the net effect of incentives-induced buybacks on the subsequent firm performance, and the role of a firm's cost of capital in shaping the relationship between future accounting performance measures subsequent to programme completion announcements, using buy-and-hold abnormal stock returns approach. The use of companies’ resources to finance SBPs has also created much controversy in the buyback literature, even stockholders and institutional investors, alleged beneficiaries of repurchases, are becoming anxious about these activities.
