IMPACT OF BUY BACK OF SHARES ON THE SHARE PRICE BAHAVIOUR- AN EVIDENCE FROM INDIAN STOCK MARKET

Abstract

Buy back is one of the important corporate actions through which company buys back its shares either from open market. Companies go for buy back of shares in two conditions generally, one is negative situation of continuous drop in share price due to negative rumors in markets, and on the other condition is effective utilization of idle cash by reducing number of owners. In both cases, share price behavior analysis very crucial for investors for taking investment decisions such as hold, buy or sold. However, there is very few studies have done on measuring the effect of buy back of shares on share price behavior particularly in Indian context. Therefore, present study focused on this by taking two companies went to buy back of shares during the period of 2020. The study analysis the share price behavior in share price returns during pre and post buy back event, including very short period, short period and long period. The study used the T-test to measure the pre and post event stock price returns from Indian stock market context. The outcome of the study proved that buy back of share is good indicator that company will generated good wealth in long period.