Shareholders versus stakeholders : a relação entre o poder dos trabalhadores e as recompras de ações

Abstract

This research aimed to investigate the impact of workers' power on companies' stock repurchase decisions, evaluating the conflict between shareholders and stakeholders over company resources. Considering the innate flexibility of repurchases relative to dividends as a form of payout, it is expected that companies with more active worker involvement will allocate fewer resources to their shareholders through repurchases. Still, the same should not necessarily happen with dividends. To test these hypotheses, we analyzed the relationship between the number of procedures filed with the Labor Prosecution Service (Ministério Público do Trabalho, MPT), as a proxy for labor power, and the stock repurchased that occurred in each period, as well as the dividends paid. We compiled the repurchases from the Securities Traded and Held documents made available by the Securities and Exchange Commission (Comissão de Valores Mobiliários, CVM). We relied on panel data regressions with firm fixed effects using data from 856 companies between 2018 and 2023. Despite not finding a statistically significant relationship between repurchases in a given year and the number of procedures filed in the same period, when analyzing year-to-year variations in repurchases, we found negative and statistically significant coefficients at 10% and 1%, respectively, in the volume of repurchases and the ratio of repurchases over earnings. Companies with a greater number of procedures in a year show a lower increase (or a decrease) in repurchases in that year compared to the previous year. As for dividends, similarly to repurchases, we only found a negative and statistically significant relationship in the variation in the ratio of dividends and earnings. Considering the values of the coefficients relative to the average values of dividends and repurchases, the effect on repurchases is more prominent. Thus, although the evidence depends on the way the variables are measured and is only statistically significant for variations over the years, the results are consistent with both hypotheses, that is, companies with higher MPT filed procedures show a lower increase in their employees' payout, both through repurchases and dividends, but the effect appears to be of greater magnitude for repurchases than for dividends. These results suggest, therefore, that there is a conflict between shareholders and stakeholders over the company's resources, so when workers are more active concerning their rights, companies spend fewer resources on shareholders, mainly in the form of share repurchases.