Share Buybacks in India: An Empirical Analysis

Sudershan Kuntluru (sudershan@iimk.ac.in) and Kevin Thomas Chacko (kevinc12fpm@iimk.ac.in)
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Sudershan Kuntluru: Indian Institute of Management, Kozhikode
Kevin Thomas Chacko: Indian Institute of Management, Kozhikode

No 333, Working papers from Indian Institute of Management Kozhikode

Abstract: Share buybacks have become a common event in the financial markets across the globe. Existing literature on academicians and practitioners view on distribution decisions is inimical. Dividends and share buyback are popular ways of rewarding shareholders. The fiscal year 2017 has seen a record number of share buyback offers from cash-rich Indian corporates. First time in the history of Indian Capital markets, the number of share buyback offers has exceeded the initial public offers. The present study examines the impact of share buyback on market performance of the firms based on earnings per share and abnormal returns. It is posited that share buyback contributes to shareholders returns. Empirical results indicate that the short-term market returns are higher than the long-term market performance. It implies that share buyback has a positive and significant impact on short-term returns as compared to long-term returns. The results are useful to investors, managers and regulators.

Keywords: Share Buyback; Dividends; Shareholders returns; Distribution decisions; India (search for similar items in EconPapers)
Pages: 20 pages
Date: 2019-03
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