Share Repurchases and Long-Run Stock Returns in Sweden : Evidence from Nasdaq Stockholm, 2010–2022

Sammanfattning

This thesis investigates whether firms engaging in open market share repurchases on Nasdaq Stockholm exhibit systematically different long-run stock returns compared to non- repurchasing firms, and whether such effects vary across market capitalization segments during 2010 to 2022. An unbalanced panel of 3,169 firm-year observations across 341 firms is analysed using pooled ordinary least squares regression with year fixed effects. The analysis finds no evidence of a return premium associated with repurchase activity at any of the one-, two-, or three-year horizons examined, a result that contrasts with earlier Swedish evidence. Several factors may explain this outcome, including a shift in repurchase motives toward routine financial management, increased market efficiency due to Sweden's mandatory disclosure framework, and the post-2008 low-interest rate environment, which may have disadvantaged firms previously driving return premia. In the Small Cap segment, repurchasing firms underperformed non-repurchasing firms by economically significant margins at the two- and three-year horizons after controlling for observable characteristics. Although this finding is robust across specifications, it is based on a small number of firms and should be considered exploratory. Overall, the evidence indicates that repurchase activity on Nasdaq Stockholm did not serve as a reliable positive signal for long-run returns during this period.