Share buybacks in India

Ajit Dayanandan, Han Donker, Sudershan Kuntluru and John Nofsinger

Research in International Business and Finance, 2020, vol. 54, issue C

Abstract: We examine the market price and liquidity reaction to 239 share repurchase announcements in India. The average abnormal return on announcement day is 2.07 percent. Firms with larger promotor ownership stakes experience higher market reactions. Using the Amihud illiquidity measure and volume, we show that liquidity improves after the announcement. Open market repurchase programs increase market liquidity while tender offers do not. Liquidity improves more for high promotor ownership firms. Lastly, shorter duration repurchase programs improve liquidity more than longer duration programs. These results are consistent with our discussion of the pecking order of ownership structure in the low information transparency environment of India.

Keywords: Share repurchase; Liquidity; India (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:54:y:2020:i:c:s0275531920302580

DOI: 10.1016/j.ribaf.2020.101296

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