股票回购对自由现金流量假说的进一步检验外文翻译Word文档格式.docx

1、原文：Stock Repurchases: A Further Test of the Free Cash Flow Hypothesis1. IntroductionEmpirical tests of firms repurchasing their stock generally conclude that the observed positive stock price reaction around the announcement of repurchase self-tender offers is consistent with the signalling theory （

2、see Masulis （1980）, Vermaelen （1981, 1984）, Dann （1981）, Sinha （1991）, Comment and Jarrell （1991）, and Howe, He and Kao （1992）. This theory argues that cash outflows （cash dividends, specially designated dividends, or repurchases） are used by management to disseminate positive asymmetric information

3、 to shareholders about the future profit potential of the firm. Specifically, Vermaelen concludes that with stock repurchases, firms offer a premium for their own shares in order to signal that the firm is undervalued. This signal is credible since the premium imposes a cost on nontendering sharehol

4、ders which includes management （who is generally precluded from participating in the offer）. If the tender offer premium is greater than the extent to which the firm is undervalued, then this false signal will result in a reduction in the wealth of nontendering shareholders （management）.An alternati

5、ve theory, and the one investigated in this article, is Jensens （1986, 1989） free cash flow （overinvestment） hypothesis. Jensen points out that a firm accumulating free cash flow can either increase its cash dividends, repurchase some of its stock, or overinvest. He argues that firms with substantia

6、l free cash flow tend to overinvest and undertake projects with negative net present values. Furthermore, when a firm with free cash flow increases its cash dividends, its value is expected to increase since fewer negative net present value projects are now taken. Of course, Jensens argument assumes

7、 that managers are not maximizing firm value. If a compensation scheme can be devised which ensures that value will be maximized, then free cash flow will not exist.The free cash flow （overinvestment） hypothesis has been investigated by Lang and Litzenberger （1989） and recently by Howe, He and Kao （

8、1992）. Using Tobins Q as a measure of the intensity of overinvestment, Lang and Litzenberger find evidence supporting the free cash flow theory in relation to cash dividends. Their empirical results are consistent with the hypothesis that dividend changes by overinvesting firms inform stockholders o

9、f the firms investment policy rather than signalling positive asymmetric information regarding the firms future profitability. Howe, He and Kao （1992） extend the study of Lang and Litzenberger by examining the free cash flow hypothesis in relation to both tender offer repurchases and specially desig

10、ned dividends （SDD）. Unlike Lang and Litzenberger, however, they find that there is no differential announcement effect for high-Q （value-maximizing） and low-Q （overinvesting） firms in relation to either stock repurchases or SDD.Since cash dividends, SDD, and repurchases represent alternative cash d

11、isbursement methods, the conflicting results of Lang and Litzenberger and Howe, He and Kao present an empirical puzzle. To shed light on this puzzle, we partition our sample of firms repurchasing their stock via a self-tender offer into three groups based on the source of the firms free cash flows.

12、Evidence consistent with the free cash flow hypothesis is found.The article is structured as follows: section 2 describes the methodology for determining the source of the free cash flow （overinvestment） problem and competing explanations. Section 3 describes the data. The empirical results are give

13、n in section 4. Concluding remarks are presented in section 5. An alternative test of the signalling theory is presented in the appendix.2. MethodologyTo clarify the implications of the free cash flow （overinvestment） and signalling theories, denote the value of the firm by V and the invested capita

14、l by K. Value maximnization occurs whenever dV/dK = 1. Overinvesting implies that dV/dK 1. Suppose that a firm ranks its investment projects in terms of profitability, for example, by the expected internal rate of return （IRR）. Then dV/dK = 1 implies that at the margin p = R, where p is the firms co

15、st of capital and R is the expected internal rate of return. Such an equilibrium dictates how much of the firms available resources should be maintained for reinvestment and how much should be distributed to stockholders. Free cash flows are precluded in such an equilibrium.For simplicity and withou

16、t loss of generality, assume a one-period model where the firm invests at t o and at t 1 the firm reinvests and distributes dividends. Consider the following three scenarios:A. At time t （where t o t t l）, the agent possesses positive asymmetric information regarding the firms future profitability. This asymmetric information can either be regarding the performance of existing capital or new projects which are