Payout Policy in the Nordic Region: A study of share repurchases in Sweden, Denmark and Finland

Abstract: The aim of this thesis is to explain observed differences in the development of payout policy between Sweden, Denmark and Finland. The main discrepancy observed over the sample period is that share repurchases is a more important payout form in Denmark. We find that inflation has an impact on the payout decision and that a high repurchase activity in Denmark can be explained by a relatively high level of inflation. Other variables, such as undervaluation and excess cash that in general theory are considered to affect payout decision, do not seem to have an explanatory impact on payout behavior in Sweden, Denmark and Finland. Although not explicitly tested, we find indications of institutional constraints and tax treatment of private investors having an impact on payout policy.