Share Repurchase

This paper studies the nature of the relationship between the share repurchase and dividend payout in the presence of asymmetric information. The study focuses on the French context over the period from 2003 to 2008. The results show that: when there is an asymmetry, the choice of managers is oriented towards stock repurchase and the reduction of dividends. It appears that the share repurchasing has a strong power signal compared to dividends. This explains the positive relationship between the asymmetry of information and the choice of repurchase and negative one related to the distribution of dividends. In the presence of asymmetry, both ways seem to be more complementary than substitutable hence the negative relationship