This study tries to find out the post-announcement performance of the buyback firms over the long term in India using data from the Bombay Stock Exchange (BSE). We have chosen the event study methodology and compared the performance for a one-year, a three-year, and a five-year period. The benchmarks chosen are the Sensex, the BSE 500, the size matched firms and the size and industry matched firms. The findings of the study show overperformance by buyback firms when compared to the Sensex and the BSE 500 but no conclusion can be drawn when compared to the size matched firms and size and industry matched firms.
AgarwallaS. K.JacobJ. & VarmaJ. R. (2013). Four factor model in Indian equities market (Working Paper No. 2013-09-05). Ahmedabad: Indian Institute of Management.
2.
AgarwallaS. K.JacobJ. & VasudevanE. (2013). Market timing ability of Indian firms in open market repurchases (Working Paper No. 2013-11-10). Ahmedabad: Indian Institute of Management.
3.
AgarwallaS. K.JacobJ. & VasudevanE. (2015). Market overreaction to poor long-run performance? A case of repurchase firms in India (Working Paper No. 2015-02-01). Ahmedabad: Indian Institute of Management.
4.
BarclayM. J. & SmithC. W. (1988). Corporate payout policy: Cash dividends versus open market repurchases. Journal of Financial Economics, 22(1), 61–82.
5.
BravA.GrahamJ. R.HarveyC. R. & MichaelyR. (2005). Payout policy in the 21st century. Journal of Financial Economics, 77(3), 483–527.
6.
ChatterjeeC. & MukherjeeP. (2015). Price behaviour around share buyback in the Indian Equity Market. Global Business Review, 16(3), 425–438.
7.
ChowdhryB. & NandaV. (1994). Repurchase premia as a reason for dividends: A dynamic model of corporate payout policies. Review of Financial Studies, 7(2), 321–350.
8.
CommentR. & JarrellG. (1991). The relative power of Dutch-auction and fixed priced self-tender offers and open market share repurchases. Journal of Finance, 46(4), 1243–1271.
9.
DittmarA. (2000). Why do firms repurchase stock?Journal of Business, 73(3), 331–355.
10.
GrullonG. & MichaelyR. (2002). Dividends, share repurchases, and the substitution hypothesis. The Journal of Finance, 57(4), 1649–1684.
11.
HyderabadR. L. (2009). Market reaction to buyback announcements in India. The IUP Journal of Applied Finance, 15(12), 53–77.
12.
IkenberryD.LakonishokJ. & VermaelenT. (1995). Market underreaction to open market share repurchases. Journal of Financial Economics, 39(2), 181–208.
13.
IkenberryD.LakonishokJ. & VermaelenT. (2000). Stock repurchases in Canada: Performance and strategic trading. Journal of Finance, 55(5), 2373–2397.
14.
JagannathanM. C.StephensM. & WeisbachM. (2000). Financial flexibility and the choice between dividends and stock repurchases. Journal of Financial Economics, 57(3), 355–384.
15.
LakonishokJ. & VermaelenT. (1990). Anomalous price behavior around repurchase tender offers. The Journal of Finance, 45(2), 455–477.
16.
LieE. & LieH. J. (1999). The role of personal taxes in corporate decisions: An empirical analysis of share repurchases and dividends. Journal of Financial and Quantitative Analysis, 24(4), 533–552.
17.
MishraA. (2005). An empirical analysis of share buybacks in India. ICFAI Journal of Applied Finance, 11(5), 5–24.
18.
MitchellM. L. & StaffordE. (2000). Managerial decisions and long-term stock price performance. Journal of Business, 73(3), 287–329.
19.
PeyerU. & VermaelenT. (2005). The many facets of privately negotiated share repurchases. Journal of Financial Economics, 75(2), 361–395.
20.
PeyerU. & VermaelenT. (2009). The nature and persistence of buyback anomalies. Review of Financial Studies, 22(4), 1693–1745.
21.
SehrawatS. (2013). Impact of shares buyback on equity shareholder’s value. Chartered Secretary, XLIII(6), 641–760.
22.
StephenC. & WeisbachM. (1998). Actual share reacquisition in open-market repurchase program. Journal of Finance, 53(1), 313–333.
23.
ZhangH. (2005). Share price performance following actual share repurchases. Journal of Banking and Finance, 29(7), 1887–1901.
