The market reactions to share repurchase announcements on the JSE: an event study
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Published April 8, 2016
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DOIhttp://dx.doi.org/10.21511/imfi.13(1-1).2016.06
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Article InfoVolume 13 2016, Issue #1 (cont.), pp. 191-205
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Cited by2 articlesJournal title: Research in International Business and FinanceArticle title: Share buybacks in IndiaDOI: 10.1016/j.ribaf.2020.101296Volume: 54 / Issue: / First page: 101296 / Year: 2020Contributors: Ajit Dayanandan, Han Donker, Sudershan Kuntluru, John NofsingerJournal title: Investment Management and Financial InnovationsArticle title: The impact of the share buyback process on financial performance: An economic and accounting perspective. Evidence from EgyptDOI: 10.21511/imfi.19(1).2022.16Volume: 19 / Issue: 1 / First page: 210 / Year: 2022Contributors: Hossam Hassan Mahmoud Al Sharawi
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This study examines the market reactions to share repurchase announcements made by companies listed on the Johannesburg Stock Exchange from the years 2003 to 2012. The authors use an event study methodology and the Capital Asset Pricing Model to determine if there was an announcement effect when a share repurchase announcement is made. The analyses reveal that consistent with signalling theory and the announcement effect, share repurchase announcements are associated with positive abnormal returns. The average abnormal return and cumulative average abnormal return noted was 0.46% and 3.81%, respectively, for the event period (t-20, t+20). There was an observable trend of declining share prices before the share repurchase announcement. The authors also found no significant evidence that repurchasing firms have market timing ability when executing a share repurchase announcement. From a value investor’s perspective, a share repurchase program conveys a very strong signal of a healthy company