| Summary: | 博士 === 國立中央大學 === 企業管理研究所 === 95 === This paper empirically examines the underinvestment problem and the use of repurchase to expropriate lenders’ wealth. This paper find that, after controlling for timing and industry effects, the repurchasing firm with debt financing has a much smaller stock price response than those without debt financing. Contrary to the implications of many payout theories, the announcements of share repurchases with previous debt issues are followed by reductions in investments, in operating performance, and in insider holdings. Results also indicate that firms with debt financing experience a significant increase in systematic risk relative to those without. Finally, evidences indicate that the short-term market reactions are positively associated with future changes in profitability and free cash flows, and negatively associated with future changes in risk, insider net selling activities and debt ratios.
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