Date of Award


Document Type

Campus Access Thesis

Degree Name

Master of Science (MS)



First Advisor

Yijia Zhao

Second Advisor

Atreya Chakraborty

Third Advisor

Xiaolu Xu


This paper investigates effects of firm size, cash flow, investment, valuation, and stock performance on the magnitude of share repurchase activity. I find that the number of shares repurchased is disconnected from the motivation to initiate a repurchase program, is not affected by an extent of stock undervaluation, and is mostly dependent on firm’s size. Furthermore, I find that managers have a “pecking order” among fundamentals considered when determining repurchase amount. I utilize an instrumental variable based on mutual fund price pressure that captures exogenous price changes and is unrelated to firm fundamentals. The instrumental variable allows to assess a degree of stock undervaluation and address endogeneity problem of using share price underperformance as a proxy for misvaluation. Furthermore, to ensure robustness of the findings, I use a quasi natural experiment setting to analyze a difference in repurchase activity during normal economic environment and 1987-1993 financial distress.


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