Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/288131 
Year of Publication: 
2022
Citation: 
[Journal:] Journal of Business Finance & Accounting [ISSN:] 1468-5957 [Volume:] 50 [Issue:] 7-8 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2022 [Pages:] 1502-1524
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
We derive a consistent valuation approach that integrates the interdependent effects of cash dividends, share repurchases and active debt management while considering personal taxes. The valuation approach is based on the assumption that a predetermined proportion of the flow to equity is used for share repurchases instead of cash dividends. Additionally, we examine the effects of share repurchases on the cost of equity by deriving appropriate adjustment formulae. Furthermore, we run simulations to investigate the valuation differences caused by the distribution of excess cash via cash dividends or share repurchases. The results show that share repurchases have a significant positive effect on equity market value.
Subjects: 
active debt management
cash dividends
cost of equity
equity market value
personal taxes
share repurchases
simulations
valuation
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article
Document Version: 
Published Version

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