The effect of repurchase motive and governance quality on stock market reactions around repurchase announcements : A study on firms listed on Nasdaq Stockholm

Sammanfattning

This study examines the market reaction to share repurchase announcements based on their stated motive and assess if governance quality (proxied by governance score) functions as a moderator of this relationship. The share repurchases are analyzed using an event study methodology and regression analysis, where the event day is defined as the announcement date of the share repurchase. The sample consists of 218 announcements from companies listed on Nasdaq Stockholm between the years 2020 and 2025. Data has been retrieved from the LSEG Datastream and Modular Finance. The study finds a significant CAR of 2,96% for share repurchase announcements with capital structure adjustment as motive, with a notable lower CAR of 0,487% for repurchases with incentive program as motive. Furthermore, the results suggest governance has a negligible effect on the moderation of CAR when comparing the share repurchase motives. The study is limited by the exclusion of firms without governance data and also is reliant on scores issued solely by LSEG Datastream. This research complements existing literature by focusing on the differentiation of repurchase motives, with the implementation of governance score in a Swedish context.