The effect of heteroskedasticity on factors affecting stock repurchases

Author First name, Last name, Institution

Anup M. Nandialath, Zayed University
Bernardo Da Veiga, Curtin University
Madan Annavarjula, Bryant University
Ramesh Mohan, Bryant University

Document Type

Article

Source of Publication

Global Business and Economics Review

Publication Date

1-1-2014

Abstract

We demonstrate the effect of ignoring the role of heteroskedasticity modelling in applied corporate finance studies and show that it may have important consequences in corporate financial decisions. In this paper, we specifically focus on the effect of heteroskedasticity on the factors affecting the open market operations of the firm. We show that in the absence of modelling heteroskedasticy results from prior research are consistent. By explicit modelling of heteroskedasticity some results are reversed. In particular, we find that the effect of key variables such as dividends, leverage and the likelihood of takeover on the probability of repurchase differs after controlling for heteroskedasticity. © 2014 Inderscience Enterprises Ltd.

DOI Link

10.1504/gber.2014.060183

ISSN

1097-4954

Publisher

Inderscience Publishers

Volume

16

Issue

2

First Page

142

Last Page

156

Disciplines

Business

Keywords

Discrete choice models, Heterosekdastic probit, Open market stock repurchases, Takeover deterrence

Scopus ID

84897457951

Recommended Citation

Nandialath, Anup M.; Da Veiga, Bernardo; Annavarjula, Madan; and Mohan, Ramesh, "The effect of heteroskedasticity on factors affecting stock repurchases" (2014). All Works. 3409.
https://zuscholars.zu.ac.ae/works/3409

Indexed in Scopus

yes

Open Access

no