Impact of Buyback Announcement on Share Price: A Company and Industry Wise Analysis
Subject Areas : General Management
S. Kumar Pradhan
1
(
Department of Management Studies, Pondicherry University, Kalapet, Pondicherry, India
)
R. Kasilingam
2
(
Department of Management Studies, Pondicherry University, Kalapet, Pondicherry, India
)
Keywords: Buyback announcements effect, Share price, Abnormal returns, Industry analysis,
Abstract :
The study attempts to find out the impact of buyback announcement on share price. Paired sample T-test is employed to compare share price before and after the buyback announcement. The analysis of variance is also used to find out whether there is any significant difference among industries in the price change due to buyback announcement. The study is carried out from 1st January 2005 to 31st December 2012. The estimation window period is taken as 10 days before and after announcement of buyback. Market adjusted model is used to calculate the abnormal return during the window period. The study concludes that the buyback announcement do not have impact on share price in industry wise analysis but have partial impact on share price in subject to company wise analysis. The abnormal returns and cumulative abnormal returns of the most of companies are positive in both long run and short run.