Volume : 8, Issue : 9, September - 2019

Stock Market Reaction to the Buyback Announcement -- An Abnormal Returns Analysis

Dr. Prabhakar U. Rane

Abstract :

The main objective of the paper is to analyze and interpret the impact of the buyback of equity announcement on the market price in the Indian context. The sample size of the paper consists of 64 initial buyback programs of listed companies announced from 1998 to 2013 For the purpose of the study, the daily actual returns for the company and for the NSE Nifty Index are calculated to estimate the expected returns by employing the market model. The actual returns are then compared with the expected returns to compute the abnormal returns for 91 days window period. A large sample t – test has been conducted to test whether abnormal returns from the buyback announcement are statistically significant. The paper finds that there are no abnormal returns for 91 days window period from buyback announcement.. The paper therefore concludes that the market does not react to the buyback announcement positively in the Indian context.