Abstract
This study investigates how stock returns respond to news of stock repurchases. The objective isto ascertain market reaction and pricing adjustment (response) to the announcement of stockrepurchase at Pakistan Stock exchange. As chosen by many researchers in this field, an estimationperiod of 120 days and a test period of 11 days has been selected, daily price data from sevenbusinesses (listed on the PSX) that announced stock repurchases between May 2022 and February2023 along with corresponding PSX index values were used. Utilizing the data from the estimationperiod and using OLS (ordinary least squares) market model, normal(Expected) returns werederived. The null hypothesis “Stock repurchase does not have any relationship with abnormalreturn is rejected, as a result of the test statistics showing a significant relationship between eventstock repurchases and abnormal returns.
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