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Share repurchases and myopia :   implications on the stock and consumer markets / 
David Bandig, Daniel Willmann, Steffen Strese, & Malte Brettel. 
 - marketing - finance interface ; myopic marketing management ; earnings management ; product recalls ; share repurchase 
 - English :  , 
 - Investor demands has promoted share repurchasers to the dominating payout instrument for U.S. firms. However, critics worry that the reprchase boom leads to firms neglecting long-term investments. Even worse, scholars have shown that investor pressure also motivates firms to cut marketing investments with the aim of boosting short-term income, a practice called myopic marketing management. Extant theory still lacks an understanding of whether and how the co-occurrence of share repurchases and myopic marketing affects firm stakeholders such as investors and consumers. Using a large-scale cross-industry sample, the authors reveal that there is a higher share of firms cutting marketing investments among repurchasing firms than among nonrepurchasing firms. Furthermore, investors immediately respond negatively to myopic firms that also repurchase shares. Finally, repurchases and myopic marketing are also associated with an increase in product recalls. This first study to assess share repurchases through a marketing lens hence reveals negative effects on both the stock and the consumer markets.