This study explores the importance of financial constraints and product market competition on the share repurchase decision. We find that financially constrained firms are more likely to conduct debt-financed share repurchases. Financially unconstrained firms, however, tend to conduct debt-financed repurchases only when debt market conditions are favourable. We also find that the level of industry competition is a significant factor behind managers’ decisions. High (low) industry competition forces financially unconstrained and undervalued firms to reduce (increase) the agency costs of free cash flows from overvalued debt financing. The implication is that firms in high-competition industries disburse excess cash through share repurchases. We find that this effect is strongest in periods outside financial crises.

本研究探讨了财务约束和产品市场竞争对股票回购决策的重要性。我们发现财务受限的公司更有可能进行债务融资的股票回购。然而，财务不受约束的公司往往仅在债务市场条件有利时才进行债务融资回购。我们还发现，行业竞争水平是管理者决策背后的重要因素。高（低）行业竞争迫使财务不受约束且价值被低估的公司降低（增加）来自高估债务融资的自由现金流的代理成本。这意味着竞争激烈的行业中的公司通过股票回购支付了超额现金。我们发现这种影响在金融危机之外的时期最为强烈。