Abstract
While Buyback helps companies to invest in themselves by reducing the number of outstanding shares in the market, it increases the investor sentiment with respect to the company as the investors expect an increased Earnings Per Share, When the Earnings Per Share increases, the market react positively and shares prices will increase. This study attempts to examine the significance of stock price behavior around the public announcement of buyback. The effect of public announcement is studied by analyzing the behavior of abnormal returns of ten companies, which made buyback announcement during the financial year 2018–19. The companies were selected from securities exchange board of India (SEBI) and National Securities Exchange (NSE) website that portrays the public announcement of all such companies. This is an event study which attempts to measure the valuation effect of a corporate event, namely public announcement of buyback by examining the response of the stock price around the announcement of the event. To test the impact of public announcement Abnormal Returns (AR) and Cumulative Abnormal Returns (CAR) are computed. The study concludes that the buyback announcement does not have any significant impact on the share price. KEYWORDS: Buyback, CAR, Abnormal Returns, Investor sentiment
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