Share purchases in Norway

2015

This thesis provides updated statistics on all share repurchase announcements and

all open market share repurchase executions for firms on the main list of the Oslo

Stock Exchange (OSE) in the period from 1998 to 2013. Further, it explores which

motives firms have for announcing and executing share repurchases. The

transparent environment for share repurchases in Norway is reflected in our detailed

dataset1.

We find that an increasing amount of firms on the main list of the OSE announce

share repurchases over the period, without it necessarily resulting in more firms

executing open market share repurchases. Further, we do not believe this is caused

by our dataset only containing open market share repurchase executions, since the

other types of share repurchase executions are very rarely employed in Norway2.

Using logit regressions, we test whether (i) the optimal capital structure hypothesis,

(ii) the excess cash hypothesis, (iii) the payout preference hypotheses3, or (iv) the

undervaluation signalling hypothesis explain why firms announce and execute share

repurchases. We find evidence that an optimal capital structure motivate both share

repurchase announcements and executions, although this could be related to

profitable firms with low leverage actively repurchasing shares. In addition, the

significance of the result is very sensitive to sample size for announcements,

suggesting that there might not be any strong motives for announcing a share

repurchase. Further, our results find no relation between dividends and share

repurchases for either share repurchase announcements or executions, indicating

support for the dividend complement hypothesis.