Share buybacks in India

We examine the market price and liquidity reaction to 239 share repurchase announcements in India. The average abnormal return on announcement day is 2.07 percent. Firms with larger promotor ownership stakes experience higher market reactions. Using the Amihud illiquidity measure and volume, we show...

Full description

Saved in:
Bibliographic Details
Published in:Research in international business and finance 2020-12, Vol.54, p.101296, Article 101296
Main Authors: Dayanandan, Ajit, Donker, Han, Kuntluru, Sudershan, Nofsinger, John
Format: Article
Language:English
Subjects:
India
Liquidity
Share repurchase
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We examine the market price and liquidity reaction to 239 share repurchase announcements in India. The average abnormal return on announcement day is 2.07 percent. Firms with larger promotor ownership stakes experience higher market reactions. Using the Amihud illiquidity measure and volume, we show that liquidity improves after the announcement. Open market repurchase programs increase market liquidity while tender offers do not. Liquidity improves more for high promotor ownership firms. Lastly, shorter duration repurchase programs improve liquidity more than longer duration programs. These results are consistent with our discussion of the pecking order of ownership structure in the low information transparency environment of India.
ISSN:0275-5319
1878-3384
DOI:10.1016/j.ribaf.2020.101296