Authors : M.A. Deepashree and N. Suresh
Abstract: Over the past few years in India, many companies have announced significant number of stock repurchases and dividends. Share repurchase have become an important area in financial research considering its strong implication for corporate policy. Buybacks were introduced in the year 1998, in India and it has received attention of all major companies. This study analyses: signaling effect of a share buyback and dividend announcements, the market reaction and share price behaviour around stock buybacks and dividend announcement, impact of buyback and dividend announcements on share price. The analysis uses 17 firms which have announced buybacks and dividends during the period 2015-2017. This study examines the signaling effect of share price by finding the abnormal return of the share price using 11 days (-5, 0, +5) event period. To find out whether buyback and dividend announcements has an impact on share prices "Autoregressive Conditional Heteroskedasticity" (ARCH) Model is used. Result shows that there is positive signaling of share prices around buyback and dividend announcements. Stock buyback announcement recorded high Cumulative Abnormal Returns (CAR). It implies that the market reacts more favorably to repurchases compared to dividend announcements.
M.A. Deepashree and N. Suresh, 2019. A Study on Share Price Behaviour Around BuyBack and Dividend Announcements in India. Journal of Engineering and Applied Sciences, 14: 7036-7039.