Title

How Do Indian Stock Market React to Repurchase of Shares Announcement? An Event Study Methodology.

Authors

Kumar, Rakesh; Kumar, Praveen; Firoz, Mohammad

Abstract

Purpose: The present study examines the impact of buyback of shares on the firms’ performance. Over the years the firms announce the repurchase of own shares in the open market for varied objectives. This raise a question whether the stock price of firms affected by these announcements. Method: In this study we attempted to answer this question using the data of 42 buyback events announced by Indian firms for the year 2017. The study employed event study methodology. Results: The results of the study indicate that the most of share repurchase announcement did not produce any significant abnormal returns. Conclusion: The buyback of shares does not significantly influence the market price of shares, as the market is so efficient to assimilate every information. The results of the study inculcate that share price at the event day already reflected the news surrounding the buyback of shares.

Subjects

STOCK exchanges; ABNORMAL returns; MARKET prices; MARKET share; STOCK prices

Publication

Wealth: International Journal of Money, Banking & Finance, 2019, Vol 8, Issue 1, p20

ISSN

2277-9388

Publication type

Academic Journal