Short-term and Long-term Shareholders: Allies or Foes? Evidence from Share Repurchases

Short-term and Long-term Shareholders: Allies or Foes? Evidence from Share Repurchases | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Short-term and Long-term Shareholders: Allies or Foes? Evidence from Share Repurchases Luis García-Feijóo, Pedro Monteiro This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7223030/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Recent criticism of share repurchases centers on potential conflicts between short- and long-term shareholders. Theoretical models, however, offer conflicting views about the severity of these conflicts. We investigate whether share repurchases are associated with underinvestment in the presence of short-horizon investors. In a sample of U.S firms over the 1988–2020 period, we find no evidence that short-term ownership and buybacks are associated with cuts to capital investments. Instead, share repurchases reduce overinvestment related to short-horizon investors. Results are robust to using Russell Indexes reconstitutions to address endogeneity. Share repurchases do not have detrimental effects on long-term value. JEL Classification Codes : G35, G23, G32 Stock Repurchase Buybacks Investment Horizon Investment Efficiency Institutional Investors Full Text Additional Declarations No competing interests reported. Funding Declaration: We gratefully acknowledge the support of the Henry George Research Funds provided by the Department of Economics, Finance, and International Business at the University of Scranton. Acknowledgements: We acknowledge the helpful comments of Nicholas Clarke (discussant), Douglas Cumming, Eric Duca (discussant), David Javakhadze, Santosh Koirala (discussant), and session participants at the 2022 Financial Management Association (FMA) Annual Meeting in Atlanta, the 3 rd Annual Boca Corporate Finance and Governance Conference in Boca Raton, Florida, the 30 th Finance Forum in Malaga, Spain, and the 2023 Southern Finance Association Meeting in Puerto Rico. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7223030","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":504741545,"identity":"374556ae-9ae6-491b-bbaf-03f2210284b3","order_by":0,"name":"Luis García-Feijóo","email":"","orcid":"","institution":"Florida Atlantic University","correspondingAuthor":false,"prefix":"","firstName":"Luis","middleName":"","lastName":"García-Feijóo","suffix":""},{"id":504741546,"identity":"d5747876-ef00-4420-a681-91bd3129ff12","order_by":1,"name":"Pedro Monteiro","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABBUlEQVRIie3QPWrDMBTA8RcK8fJAq7q4V3hgqAmU+io2AU8ZCoGiMSXgLj6ASy9hKHi2EXgS6RpQoUPAUwZ16Vw3tCYBmXTsoP8gBNIPfQC4XP8zGmY1wM3xSnyGTA8kHfDfSJ88T0JvXRkDlR9erRspxGvEnmW3M+INmLcgG5nl7fKpAB3MsmncKKWTYpOGVKsOLvO9ldB2EVwg6KRskZqHTMeEcM2bTH4v2cn7/pcw05NNROh9Hkg0RrY4nAI9qScl4s8pfOwt6XJSkA6oTalZqXlSKLznSknkqruz/5h8ASO0T1LuPlbiNmK5V3EhpM8e56X1YkfjaWjbPrbZ5XK5XKd9AQTrZY0evKQfAAAAAElFTkSuQmCC","orcid":"","institution":"University of Scranton","correspondingAuthor":true,"prefix":"","firstName":"Pedro","middleName":"","lastName":"Monteiro","suffix":""}],"badges":[],"createdAt":"2025-07-26 19:53:12","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-7223030/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7223030/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":99308416,"identity":"b3657160-35f2-4286-b178-7e8569754ebb","added_by":"auto","created_at":"2025-12-31 16:08:27","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":688489,"visible":true,"origin":"","legend":"","description":"","filename":"Draft26Jul2025RQFA.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7223030/v1_covered_e2b0110f-1d43-4c26-845b-df5c2882a8da.pdf"}],"financialInterests":"\u003cp\u003eNo competing interests reported.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eFunding Declaration:\u003c/strong\u003e We gratefully acknowledge the support of the Henry George Research Funds provided by the Department of Economics, Finance, and International Business at the University of Scranton.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAcknowledgements:\u003c/strong\u003e We acknowledge the helpful comments of Nicholas Clarke (discussant),\u0026nbsp; Douglas Cumming, Eric Duca (discussant), David Javakhadze, Santosh Koirala (discussant), and session participants at the 2022 Financial Management Association (FMA) Annual Meeting in Atlanta, the 3\u003csup\u003erd\u003c/sup\u003e Annual Boca Corporate Finance and Governance Conference in Boca Raton, Florida, the 30\u003csup\u003eth\u003c/sup\u003e Finance Forum in Malaga, Spain, and the 2023 Southern Finance Association Meeting in Puerto Rico.\u003c/p\u003e","formattedTitle":"Short-term and Long-term Shareholders: Allies or Foes? 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