Buyback Announcements and Stock Market Reaction in India: Testing the Market Condition Hypothesis
The IUP Journal of Applied Finance, Vol. 19, No. 2, April 2013, pp. 64-83
Posted: 4 May 2013
Date Written: May 3, 2013
This paper aims to study the stock market reaction around buyback announcements made during a 10-year period between 2000-01 and 2009-10 by taking the S&P CNX 500 index companies and dividing the period into normal and active market conditions. Through the standard event study methodology, it also intends to analyze the buyback information impact on stock returns during different conditions and comment on market efficiency in assimilating the information into prices. While evidencing semi-strong form of efficiency during the two periods considered, the study documents the different dosages in the reaction (signaling) of the Indian stock market to buyback announcements in accordance with differing market conditions considered.
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