To Buy Back or Not to Buy Back : A qualitative study among listed companies about share buybacks

The prevalence of share buybacks has risen significantly worldwide, motivating a need for deeper insights into the motivations and circumstances driving these decisions. While prior studies have largely emphasised quantitative analyses and numerical optimisation, this research explores the qualitative dimensions of buybacks. Focusing on the research question,“Why do firms choose to return capital through share buybacks?”. The study addresses a gap in existing literature by examining strategic reasoning through interviews with CFOs of majorlisted Nordic firms. Findings reveal that share buybacks are highly contextual and influenced by stakeholders, financial conditions, and market dynamics. They are often employed when surplus cash cannot be allocated to investments with sufficient net present value, such as mergers and acquisitions. However, buybacks offer flexibility in shareholder remuneration and are seen as effective under specific conditions. The study also highlights potential risks when buybacks are pursued without alignment to broader strategic goals. This research provides additional perspectives on share buyback strategies, contributing to the existing body of knowledge. Future studies could expand on these findings through broader geographic coverage, such as including U.S. firms, and by integrating qualitative data to deepen the understanding of buyback timing and rationale.