Buyback Announcements of Small Market Capitalized Firms and the Shareholders’ Value Creation
International Journal of Advanced Scientific Research and Management, Volume 3 Issue 5, May 2018
6 Pages Posted: 19 Apr 2019
Date Written: May 25, 2018
Share repurchase commonly known as buyback in India, represents reverse process than issue of shares. Share buyback are carried out with different motives. A buyback generally refers to a corporate restructuring tool where, company through different options offer existing shareholders usually better price than price prevailing in the market. Reactions of such announcements towards market equilibrium idea and share holders’ value creation through abnormal return over market is studied with the help of event study methodology – market adjusted model. This study examines the announcements of buyback of shares by small capitalized companies during year 2010-2016. An analysis of security price performance over benchmark index surrounding 21 days i.e. 10 days pre and post days of the announcements suggest negligible return on the day of announcements and negative average abnormal return in said range.
Keywords: Buyback, Event study, Shareholders value
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