Buybacks and Bytes: Share Repurchases and Firm Value in the Software Industry

We analyze the share‐repurchase intensity of U.S. software firms during 2015–2024, an industry distinguished by its extensive use of buybacks. Our study focuses on high‐growth software firms and evaluates how their repurchase practices affect both market valuation and operating performance. The results reveal systematic differences in market and operating responses to share repurchases across growth stages. Repurchases by high‐growth software firms are associated with less favorable market reactions, consistent with investors placing greater weight on retained capital and investment flexibility when firms face substantial growth opportunities. Among high‐growth firms, larger repurchase programs are associated with weaker operating performance, whereas higher R&D intensity is associated with better outcomes.