THE EFFECT OF SHARE REPURCHASE ON THE PERFORMANCE OF COMPANIES LISTED ON BURSA MALAYSIA

Abstract

The aim of this research is to examine the impact of share repurchase towards the performance of listed companies in Bursa Malaysia. Share repurchase has become significantly popular in recent years. It has been recognized as one of the effective tools to enhance communication between companies and their shareholders. This research consists of two specific objectives; to examine the relationship between repurchases of shares and the performance of listed companies on Bursa Malaysia and to examine the relationship between Share repurchase and return on asset (ROA). This research comprises several theories such as signaling theory, efficient market hypothesis, free cash flow hypothesis as well as substitution hypothesis. In this research, company performance is the dependent variable while the independent variables are known as share repurchase. The impact of independent variable towards dependent variable has been examined in this research. Furthermore, asset turnover, cash flow margin, leverage, and market-to-book ratio of company was the control variable. This research has employed secondary data to examine the effect of share repurchase towards listed company’s performance in Bursa Malaysia. The data was derived from several sources such as Bursa Malaysia official website, annual report of the company as well as DataStream database. Several statistic tests have been carried out to test the objective of research.