Are Share Repurchases Really Flexible?

This paper documents a trend of declining flexibility in share repurchase policies over the last four decades. We show that repurchases have become particularly sticky for firms with repurchase programs in place. We also exploit the additional inflexibility within existing repurchase programs to show that repurchase stickiness can have real effects for firms. Using the 2008 financial crisis as a shock to firms' ability to raise capital, we find that firms with ongoing share repurchase programs ending after December 2007 reduce investment, employment, and R&D spending by more than similar firms with programs ending before the onset of the crisis.