A Study on the Comparison of Financial Business and Non-Financial Business in Value-relevance of the Stock Repurchase
Authors:   Asia-Europe Perspective Association, Choi Young-Moon 
Published: June 2018

From the prior studies, the companies that have sufficient cash, but not have adequate investment opportunities, are willing to purchase the treasury stock. But the companies are not willing to be dividend decision. Recently, they are increasing the percentage of stock repurchase on the purpose of anti-takeover, stock price stabilities and an employ's incentives. Treasury stock is a stock of buying and holding for reselling and destruction. But, In the commercial law, an active of stock repurchase are prohibited originally.
It is revealed that the phase of buying the treasury stock is different according to the types of businesses. Also, it is founded that the effect of stock repurchase is different by the types of businesses, its buying objectives, the market condition and the firm characteristics.
So, this study is to comparatively analyze the value-relevance of the stock repurchase in the financial businesses and non-financial businesses. That is, this paper establish the hypotheses which is there the difference between financial business and non-financial business in the firm value change effect of stock repurchase and analyses the effect of firm value by the objectives of stock repurchase. And this study considered the market condition and the firm characteristics. And in addition, this study is to comparatively analyze the value-relevance of the stock repurchase in the traditional businesses and non-traditional businesses.
The sample firm used the empirical analysis is the December’s KSE listed firm of financial and non-financial business and the analysing period is from 2000 to 2011. The method of analysing is a multiple regression, t-test and Voung' test.
According to the basic data, the percentage of stock repurchase is the most high in the objectives of stock price stabilization than other objectives. And that percentage is higher on the condition of market decreasing than the that of market increasing.
On the result of descriptive statistics of variables and T-test, the most variables used this paper's empirical analysis model have a statistically significance and have the statistically difference in the comparing sample group which is financial and non-financial businesses. Especially, the ratio stock repurchase between financial and non-financial businesses has much difference and the impact of stock price change has statistically significance.
According to this results, when firms stock repurchase on the purpose of supporting stock price, the relation between the stock repurchase and the firm value has a sign of positive in statistically 5% significance. And the absolute value of the variable REPRCH has the bigger value in non-financial businesses.
The analysing are considered firm characteristics showed different results. The relation between the return of stock price and the rate of stock repurchase has a significant negative sign in considered the variables of firm size, access of cash flow and firm risk which is firm operating income variation. But The relation between the return of stock price and the rate of stock repurchase has a significant positive sign in considered the variables of unexpected net income, leverage change and the ratio cash dividend. These results are the same in financial and non-financial businesses.
And the effect on the firm value is the larger in the case of the time of decreasing stock price, small size firm, high debt ratio and the risk of operating activity. These results are the same in financial and non-financial businesses.
This paper provides the different view with the fact of the stock repurchase phase is different between financial and non-financial business.
Additionally test results, the effect of stock return change of the stock repurchase is little difference in the manufactural and the non manufactural businesses. But the effect of stock return change of the stock repurchase is significantly difference in the traditional and non-traditional busi