Announcement effect of tender offer share buyback around turmoil period – evidence from India
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Received April 21, 2024;Accepted July 4, 2024;Published August 5, 2024
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Author(s)Link to ORCID Index: https://orcid.org/0000-0001-8459-2055
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Link to ORCID Index: https://orcid.org/0000-0001-9313-9754,
Link to ORCID Index: https://orcid.org/0000-0002-8701-6720,
Link to ORCID Index: https://orcid.org/0000-0002-3770-8956,
Link to ORCID Index: https://orcid.org/0000-0002-2221-3133 -
DOIhttp://dx.doi.org/10.21511/imfi.21(3).2024.14
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Article InfoVolume 21 2024, Issue #3, pp. 160-169
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The announcement of a buyback informs the market about the company’s decision to repurchase its own shares. This announcement highlights the company’s price valuation and the inefficiencies that exist in the market. This study examines the share buyback announcement effect during the COVID-19 period. The study considered the stocks listed in the National Stock Exchange (NSE) that offered share buyback under tender offer mode during the pre-pandemic period between April 2016 and February 2020 and the post-pandemic period between March 2020 and March 2022. 75 firms in the pre-pandemic period and 43 in the post-pandemic period that announced share buyback under the tender offer method were analyzed. The event study methodology using a market model was employed to determine the presence of abnormal returns during the event period, which consisted of –21 days and +21 days. The findings of the study revealed the existence of abnormal returns in and around the announcement date. Besides, statistically significant cumulative abnormal average returns (CAAR) were also found on the event day, i.e., on Day 0. The study found that the impact of buyback announcements on stock returns significantly differed before and after COVID-19 for 10 and 21-day periods, with no significant differences for shorter periods. These insights can help traders and fund managers make informed portfolio adjustments during turbulent market periods surrounding buyback announcements.
Acknowledgement
The authors express their sincere gratitude and special thanks to Dr. Krishna T.A., Assistant Professor, Department of Professional Studies, School of Commerce, Finance and Accountancy, CHRIST (Deemed to be University), Bangalore, India, for encouraging, motivating and providing all the required support throughout this empirical investigation and to accomplish this research task.
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JEL Classification (Paper profile tab)G14, G12 and G30
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References23
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Tables5
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Figures0
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- Table 1. CAAR and BHAR for pre-COVID-19 period
- Table 2. Pre-and-post event day CAAR and BHAR
- Table 3. CAAR and BHAR for post-COVID-19 period
- Table 4. Pre- and post-event day CAAR and BHAR
- Table 5. Paired t-test results for pre- and post-COVID-19 period Average Abnormal Returns
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Conceptualization
Suresha B., Kavitha Desai, Rejoice Thomas
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Data curation
Suresha B., Kavitha Desai, Rejoice Thomas, Nijumon K John, Elizabeth Renju Koshy
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Formal Analysis
Suresha B., Nijumon K John, Elizabeth Renju Koshy
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Funding acquisition
Suresha B.
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Investigation
Suresha B.
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Methodology
Suresha B., Rejoice Thomas, Nijumon K John, Elizabeth Renju Koshy
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Project administration
Suresha B., Kavitha Desai, Rejoice Thomas
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Resources
Suresha B., Kavitha Desai, Nijumon K John, Elizabeth Renju Koshy
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Supervision
Suresha B., Kavitha Desai, Nijumon K John, Elizabeth Renju Koshy
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Validation
Suresha B., Kavitha Desai, Rejoice Thomas, Nijumon K John, Elizabeth Renju Koshy
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Writing – original draft
Suresha B., Kavitha Desai
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Visualization
Rejoice Thomas, Elizabeth Renju Koshy
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Writing – review & editing
Rejoice Thomas, Nijumon K John, Elizabeth Renju Koshy
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Conceptualization
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The impact of foreign ownership on corporate governance: evidence from an emerging market
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Fund performance-flow relationship and the role of institutional reform
Investment Management and Financial Innovations Volume 15, 2018 Issue #1 pp. 311-327 Views: 2005 Downloads: 240 TO CITE АНОТАЦІЯExtant literature shows the positive impact of institutional development on investor rationality and market efficiency. The authors extend this evidence by investigating the performance-flow relationship in the Chinese mutual fund market before and after the enforcement of the revised Law of the People’s Republic of China on Securities Investment Fund. Empirical evidence reveals that Chinese investors irrationally chase past star performers before institutional reform, but gradually become rational and less obsessed with star-chasing behaviors after reform. Moving one percentile upward in the relative performance among the star funds is associated with money inflows by 0.532% after reform, much lower than 1.433% before reform. The findings confirm the positive influence of institutional development on investor rationality and market efficiency. The successful experience can be borrowed by other emerging markets with less developed institutions.
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Ukrainian hryvnia under the floating exchange rate regime: diagnostics of the USD/UAH exchange rate dynamics
Anzhela Ignatyuk, Valerii Osetskyi
, Mykhaylo Makarenko
, Alina Artemenko
doi: http://dx.doi.org/10.21511/bbs.15(3).2020.12
Banks and Bank Systems Volume 15, 2020 Issue #3 pp. 129-146 Views: 1936 Downloads: 843 TO CITE АНОТАЦІЯThe study identifies the features of the USD/UAH exchange rate dynamics for the period from January 2014 to May 2020. The main purpose of the empirical analysis is to determine the current trend of the USD/UAH exchange rate (is it random or permanent), indicate the presence of seasonality in foreign exchange rate dynamics and evaluate its sensitivity to external shocks. Three hypotheses are tested using several methods of time series analysis (autocorrelation analysis, ADF, Phillips-Perron and Granger tests), including a trend-season model using a time series of one variable (ARMA), a multifactor VAR-model, impulse functions. The results show that, the movement of the hryvnia exchange rate against the US dollar is a stochastic process. Its trend has a random component and tends to change sharply over time. Moreover, exchange rate fluctuations are seasonal. It depreciates in the first and second quarters, and strengthens in the third and fourth. Some macroeconomic indicators cause a positive or negative reaction of the USD/UAH exchange rate. This indicates that today the Ukrainian foreign exchange market is relatively efficient, but stable, since its reaction to external shocks is short-term, insignificant and tends to fade out. Although the findings are controversial, they support the generally accepted view that the exchange rate formation is a multifactorial process that depends on several macroeconomic factors. However, high volatility and random walk specification indicate that it is almost impossible to predict its future value at this time.
Acknowledgment
The material was prepared within the framework of the scientific research Modeling and Forecasting the Behavior of Financial Markets as an Information Base for Ensuring Financial Stability and Security of the State, No. 0117U003936 (supervisor Alex Plastun).