The Impact of Share Repurchase on R&D Expenditure: An Empirical Study from High-tech industry

Abstract

After the policy was released in 2018, listed companies increased the frequency and amount of repurchases. Some studies believe that managers will give up long-term investment which is beneficial to the sustainable development of enterprises due to the short-term performance response caused by share repurchases. This paper took the repurchase firms in the high-tech industry from 2008 to 2018 as samples, it is found that the company’s share repurchase promotes R&D expenditure and will not reduce expenditure in R&D for short-term stock price reaction. Furthermore, the heterogeneity study found that in state-owned firms, the company’s share buybacks have a more significant role in promoting R&D expenditure.