European Sociological Review Advance Access originally published online on April 26, 2006
European Sociological Review 2006 22(4):383-396; doi:10.1093/esr/jcl003
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Economic Action and Interfirm Relations: Diffusion of Stock Repurchases on the Stockholm Stock Exchange 2000–2003
Department of Sociology, Stockholm University, S-106 91 Stockholm, Sweden. Tel.: +46 8 6747295; fax: +46 8 6125580; email: love.bohman{at}sociology.su.se.
This study examines the importance of interorganizational relations for stock repurchases made on the Stockholm Stock Exchange between 2000 and 2003. Building on theories of social influence, the main argument made is that stock repurchases are associated not only with specific economic characteristics of the repurchasing firms but also with social influence through board interlocks. The study makes use of parametric survival analysis and is performed on all firms listed on the Stockholm Stock Exchange in at least January and June in one of the examined years. The result suggests that the decision to repurchase stocks is dependent on both the firms’ economic settings and their social embeddedness in terms of board interlocks. The argument of social embeddedness holds true even when ownership interlocks are taken into consideration. This is particularly important because there seems to be some overlapping between the director and the ownership network, and controlling for ownership interlocks increases the credibility of the argument that stock repurchases made during the studied period were associated with social embeddedness in terms of board interlocks.
Manuscript received: September 1, 2005.