SHARE REPURCHASE DECISION: FREE CASH FLOW HYPOTHESIS OR SIGNALING THEORY

Purwanti, Endah Jati and Suranta, Eddy and Midiastuty, Pratana Puspa (2014) SHARE REPURCHASE DECISION: FREE CASH FLOW HYPOTHESIS OR SIGNALING THEORY. In: ASIA EMERGING ECONOMY TOWARD GLOBAL ECONOMIC INTEGRATION, 18-20 Oktober 2012, Fakultas Ekonomi Universitas Sriwijaya Palembang, Indonesia.

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Abstract

This study aims to examine the factors that affect companies doing sharerepurchase with free cash flow as dependent variable, firm value, firm size,leverage, eamings per share, and dividends. The sample in this study are thecompanies that make share repurchase and the comparison companies listed onthe Indonesia Stock Exchange in 20A4 untll 2A09. Data used in this research issecondary data obtained from financial data an the website wrr*rv. idx.com. Thenumber of samples in this study were as many as 38 companies consisting of l9companies doing share repurchase and 19 comparison companies are not doingshare repurchase. Data analysis was performed with logistic regression using SPSS versionl6.0. Results of hypothesis testing showed the influence of a low firm value (undervalued) more influence corporate decisions to share repurchase andsignificant (Significant : AA34). Free cash flow in order to reduce the agencyproblem does not show significant results to influence the company's decision toshare repurchase (Significant 0141). Furthermore, eamings per share showed anegative and significant influence but the dividends show a positive influence andnot significant where the second hlpothesis is also rejected. Free cash flow,eamings per share, and dividends is a variable that hypothesis is rejected Size alsoaffects the company and leverage the company's decision to share repurchase.

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