Share Buyback In India: Performance Evaluation Of Share Price Of Selected Companies

Abstract

Share buybacks are not just a tool to reduce the share capital of the company as understood by layman, but it is an excellent strategic financial reengineering weapon used by the corporations to serve myriad purposes and bring out the corporation from vulnerable situations. Developed countries have rich literature over the buybacks that provide array of multi-dimensional studies focusing different variables and techniques pertaining to unique regulatory environment of every economy and availability of data. But in India, this area remains under-studied many times it is difficult to interpret the intention of management behind buyback announcement. So this article intended to question the efficacy of buyback as a corporate strategy in India and the magnitude of market reaction found over the share price on the announcement of tender offers in India. As contended that under conditions of information asymmetry, the choice of executives on the form of payout is oriented towards stock repurchases, it will be useful to know whether managers of Indian companies use buyback in this perspective.