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Does Share Repurchase Announcement Lead to Rise in Share Price? Evidence from India

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  • Paramita Mukherjee
  • Chanchal Chatterjee

Abstract

In recent years, there is an increasing trend of share repurchase announcement by Indian firms. This article attempts to examine whether open market share repurchase announcements in India lead to excess stock returns and to identify the factors responsible for additional stock returns. Apart from a standard market method, the price behaviour is examined on an individual basis. The results show that the firms, on an average, do not experience price improvement after share repurchase. While 24 per cent of the firms lose and 10 per cent gain, the rest experience no change. In normal times, investors prefer small-cap companies, but post-announcement, promoters’ share and premium play an important role.

Suggested Citation

  • Paramita Mukherjee & Chanchal Chatterjee, 2019. "Does Share Repurchase Announcement Lead to Rise in Share Price? Evidence from India," Global Business Review, International Management Institute, vol. 20(2), pages 420-433, April.
    • Handle: RePEc:sae:globus:v:20:y:2019:i:2:p:420-433
    DOI: 10.1177/0972150918825327
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