Share buybacks in the United States and the United Kingdom

By analyzing the firm characteristics of 7.607 instances of share repurchases over the last 14 years (2004 up and until 2018), it is found that only the cashflow theory has effectusing anOLS regression.No effectof other control variables or theories like the signaling hypothesis, optimal capital structure and the hostile take-over defense have been observed.To investigate whether the same results hold over time, a probit analysis has been performed. It is found that UK firms are 11,9% less likely to announce a share repurchase. Also in this case, the excess cash hypothesis is confirmed based on the results. The hostile takeover hypothesis can also be confirmed, meaning that firms are more likely to announce a share repurchase program in order to prevent a hostile takeover. In addition, evidence is also found for the optimal capital structure theory and the signalling hypothesis.Finally, a prediction ismade on the chance of a share repurchase to be announcedgiven the data (firm characteristics and control variables) ofthe sample. It is found that share repurchases are correctly classified (predicted) with an83,21% probability.