Do Share Repurchases Distort Stock Prices? Evidence from the United States and Malaysia

Chee, Chong Meng; Razak, Nazrul Hisyam Ab; Noordin, Bany Ariffin bin Amin

doi:10.1177/23210222211024380

Cited by 3 publications

(2 citation statements)

References 72 publications

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“…In the United States, share repurchases can be used as a signalling tool and price support to help stock prices become more efficient, and share repurchases have no effect on stock prices in Malaysia (Chee et al, 2021). Jena et al (2020) investigated the determinants of share buyback choice in India for 430 buybacks and found that tender-offer and open-market buybacks are not close substitutes for one another that these two widely used methods serve different purposes for companies in India, and that companies should choose the repurchase method based on the buyback's purpose.…”

Section: Magnitude Of Share Repurchasesmentioning

confidence: 99%

“…Doan et al (2011) emphasize that if a company feels a significant takeover danger, it will boost its on-market share buyback activity. The notion that share repurchase acts as a price support and signalling mechanism to encourage more efficient stock pricing has been supported by Chee et al (2021). Undervaluation is the primary reason for going for share repurchases.…”

Section: Introductionmentioning

confidence: 99%

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Valuation Effects of Magnitude and Frequency of Share Repurchases: Indian Evidence

Pandey

2024

Metamorphosis: A Journal of Management Research

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This study examines the valuation effects of the magnitude and frequency of share repurchases for 181 Bombay Stock Exchange–listed stocks from 2000 to 2021. We investigate the valuation effect of share repurchases by calculating the sample companies’ average abnormal returns (AARs) and average cumulative abnormal returns (CARs) using the market model of event-study methodology. The findings show that the magnitude of share repurchases impacts the stock prices of the sample companies, regardless of the size of the repurchases concerning the total number of ordinary shares outstanding. Furthermore, when compared to single-time repurchasing companies, frequent repurchasing companies experience abnormal returns. This study contributes to the scant literature on the frequency and magnitude of share repurchases across the world.

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Section: Magnitude Of Share Repurchasesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Valuation Effects of Magnitude and Frequency of Share Repurchases: Indian Evidence

Pandey

2024

Metamorphosis: A Journal of Management Research

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Trend of Short-term Returns Generated through Share Buyback Offers in India

Bala¹

2022

MJFA

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The present paper intends to examine the trend of short-term returns generated by buyback offers in India; and other related aspects to such offers like investors’ response, and the method of repurchase used. A sample of 589 companies has been selected for the study. These are the “Indian companies across sectors which have initiated buyback offers, and are listed at Bombay Stock Exchange, and/or National Stock Exchange” from 1999-00 to 2020-21. The secondary data has been derived from the PRIME database for a time period of 22 years. Descriptive Statistics, Moving Average, and Bi-variate Regression analysis has been employed for investigation. The analysis has revealed an irregular trend of short-term returns which have been created through buyback events. The corporate sector is seen to be moving from the Stock Exchange Method of buyback to the Tender Method, along with encouraging shareholders’ response rate to buyback offers.

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The impact of the share buyback process on financial performance: An economic and accounting perspective. Evidence from Egypt

Sharawi

2022

Investment Management and Financial Innovations

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This study aims to investigate the impact of the share buyback process and its motives on financial performance from an accounting and economic perspective. The study sample consisted of 66 firms listed on the Egyptian Stock Exchange from 2009 to 2020 and employed the OLS regression analysis. The results show a positive effect of share buybacks on financial performance, measured by the added economic value (EVA) and the return on equity (ROE). In contrast, the results show an insignificant effect of share buybacks on the return on assets (ROA). The study found that management’s motives to buy back shares affect a company’s financial performance. The study also found that management’s motive to achieve a cash surplus improves the company’s financial performance. The study also found that the company’s management motive to increase earnings per share is one of the most important motives for the company to buy back shares, which also improves the company’s financial performance. The study also showed that the economic value added (EVA) is one of the most important measures of financial performance, in which the repurchase of shares had the most significant impact in improving it over the return on assets or the return on equity. However, the study did not find evidence that the firms repurchase of shares out of increased financial leverage affects the financial performance. Moreover, the study found that increasing earnings per share is the most crucial motive for sharing buybacks in the Egyptian market. AcknowledgmentsI thank Jeddah International College for funding this research and continuous support from the Dean, Dr. Tariq Hamdi, and the general manager, Mr. Yazid Al Tunisi.I thank Professor Dr. Mohamed Tahoun, Professor of Financial Accounting at Alexandria University, for reviewing this research before sending it to the journal.

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Do Share Repurchases Distort Stock Prices? Evidence from the United States and Malaysia

Cited by 3 publications

References 72 publications

Valuation Effects of Magnitude and Frequency of Share Repurchases: Indian Evidence

Valuation Effects of Magnitude and Frequency of Share Repurchases: Indian Evidence

Trend of Short-term Returns Generated through Share Buyback Offers in India

The impact of the share buyback process on financial performance: An economic and accounting perspective. Evidence from Egypt

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