Does Share Repurchase Announcement Lead to Rise in Share Price? Evidence from India

Paramita Mukherjee and Chanchal Chatterjee

Global Business Review, 2019, vol. 20, issue 2, 420-433

Abstract: In recent years, there is an increasing trend of share repurchase announcement by Indian firms. This article attempts to examine whether open market share repurchase announcements in India lead to excess stock returns and to identify the factors responsible for additional stock returns. Apart from a standard market method, the price behaviour is examined on an individual basis. The results show that the firms, on an average, do not experience price improvement after share repurchase. While 24 per cent of the firms lose and 10 per cent gain, the rest experience no change. In normal times, investors prefer small-cap companies, but post-announcement, promoters’ share and premium play an important role.

Keywords: Share buyback; market model; Indian equity market; repurchase announcement; abnormal return (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:sae:globus:v:20:y:2019:i:2:p:420-433

DOI: 10.1177/0972150918825327

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