A CEO for All Markets: The Impact of Executives'Career Diversity on Share Buybacks

摘要

The benefits of share repurchases,which reflect the mechanism of buying back a firm's own outstanding shares from the stock market to increase their share price and distribute cash to shareholders,have been broadly covered by finance scholars(e.g.,Busch and Obernberger 2017;Dittmar and Field 2015).However,studies on share repurchases outside the context of financial markets have found a darker side represented in their market-related outcomes: when done excessively,they are usually incentivized by maximizing executives'stock-based compensation(Kim and Ng 2018)and can lead to cutting crucial long-term investments such as marketing,R&D,or CAPEX to finance the repurchases(Bendig et al.2018;Grullon and Michaely 2004).Research to date has only emphasized financial motivators behind repurchases without addressing the strategic decision-making-patterns that drive CEOs to repurchase shares.Cross-land,Zyung,Hiller,and Hambrick,(2014)argue that the patterns CEOs instrumental ize in creating novel strategies are shaped by the variety of their overall career.We therefore aim to address following questions;1.Will CEOs with a high career variety recognize the circumstantial hazards of share repurchases and deprioritize them as an investment? 2.How will high-variety CEOs react to share repurchases when faced with stock option pay?