Empirical studies on share issuance and repurchase decisions

Financial constraints influence corporate policies of firms, including both investment decisions and external financing policies. The relevance of this phenomenon has become more pronounced during and after the recent financial crisis in 2007/2008. In addition to raising costs of external financing, the effects of financial crisis limited the availability of external financing which had implications for employment, investment, sale of assets, and tech spending. This thesis provides a comprehensive analysis of the effects of financial constraints on share issuance and repurchases decisions. Financial constraints comprise both internal constraints reflecting the demand for external financing and external financial constraints that relate to the supply of external financing. The study also examines both operating performance and stock market reactions associated with equity issuance methods. The first empirical chapter explores the simultaneous effects of financial constraints and market timing on share issuance decisions. Internal financing constraints limit firms’ ability to issue overvalued equity. On the other hand, financial crisis and low market liquidity (external financial constraints) restrict availability of equity financing and consequently increase the costs of external financing. Therefore, the study explores the extent to which internal and external financing constraints limit market timing of equity issues. This study finds that financial constraints play a significant role in whether firms time their equity issues when the shares are overvalued. The conclusion is that financially constrained firms issue overvalued equity when the external equity market or the general economic conditions are favourable. During recessionary periods, costs of external finance increase such that financially constrained firms are less likely to issue overvalued equity. Only unconstrained firms are more likely to issue overvalued equity even during crisis. Similarly, small firms that need cash flows to finance growth projects are less likely to access external equity financing during period of significant economic recessions. Moreover, constrained firms have low average stock returns compared to unconstrained firms, especially when they issue overvalued equity. The second chapter examines the operating performance and stock returns associated with equity issuance methods. Firms in the UK can issue equity through rights issues, open offers, and private placement. This study argues that alternative equity issuance methods are associated with a different level of operating performance and long-term stock returns. Firms using private placement are associated with poor operating performance. However, rights issues are found empirically to be associated with higher operating performance and less negative long-term stock returns after issuance in comparison to counterpart firms that issue private placements and open offers. Thus, rights issuing firms perform better than open offers and private placement because the favourable operating performance at the time of issuance generates subsequent positive long-run stock price response. Right issuing firms are of better quality and outperform firms that adopt open offers and private placement. In the third empirical chapter, the study explores the levered share repurchase of internally financially unconstrained firms. Unconstrained firms are expected to repurchase their shares using internal funds rather than through external borrowings. However, evidence shows that levered share repurchases are common among unconstrained firms. These firms display this repurchase behaviour when they have bond ratings or investment grade ratings that allow them to obtain cheap external debt financing. It is found that internally financially unconstrained firms borrow to finance their share repurchase when they invest more. Levered repurchase firms are associated with less positive abnormal returns than unlevered repurchase firms. For the levered repurchase sample, high investing firms are associated with more positive long-run abnormal stock returns than low investing firms. It appears the market underreact to the levered repurchase in the short-run regardless of the level of investments. These findings indicate that market reactions reflect both undervaluation and signaling hypotheses of positive information associated with share repurchase. As the firms undertake capital investments, they generate future cash flows, limit the effects of leverage on financial distress and ultimately reduce the risk of the equity capital.

‘Mo Rùn am Fearann’ – ‘My Love is the Land’: Gaelic landscapes of the 18th and 19th centuries

The period of the 18th and 19th centuries was one of great change in the Highlands and Islands of Scotland. Improvement, the Jacobite Rebellions, and the Clearances transformed its communities and landscapes. These events have rightly been a focus of research. However, archaeological approaches have often sought simply to illustrate these processes, rather than create new narratives about life in the past. The resulting picture of the period can over-emphasise economic change whilst failing to reflect the richness and variety of everyday life. This thesis aims to suggest a new approach to the place and period, one which addresses matters often ignored in previous work. Whilst it has an archaeological sensibility, it draws on ideas from outside archaeology, such as landscape theory and on Gaelic oral tradition, an underused resource, to create a novel and broad-based approach to the period. An important part of the method is a synchronic approach that seeks to reconstruct the experience of the landscape at very particular times, engaging fully with the everyday experience of landscape rather than grand historical narratives. Two Hebridean case studies are utilised: Hiort (St Kilda) and Loch Aoineart, South Uist. Thematic discussions drawn from these landscapes are intended as critical assessments of the efficacy of the approach, as well as new narratives about life in the past in themselves. The thesis concludes by comparing the two case studies, reflecting on the merits of the approach, discussing recurrent themes in the work, and considering its wider context and implications. It is concluded that taking a novel approach to the case study landscapes can create narratives that often contrast or expand upon those produced by previous scholars, allow for a more detailed consideration of everyday life in the period, and open up new areas for archaeological enquiry. The extensive and critical use of evidence from Gaelic oral tradition is highlighted as crucial in understanding life and society in the period. The thesis questions the utility of grand historical narratives as a framework for archaeological study of post-medieval Gaeldom and suggests that our understanding of the past is best served by approaching the evidence in ways which allows for many different voices and stories from the past to emerge.