Price Behaviour around Share Buyback in the

Indian Equity Market

Chanchal Chatterjee & Paramita Mukherjee*

International Management Institute Kolkata

ABSTRACT
Share repurchase is becoming an important corporate practice in India of late. But, there exists a paucity of
systematic study regarding the motives, nature and impact of buyback on share prices of respective companies.
This paper makes an attempt to examine the effect of share repurchase announcement by Indian companies
through open market route during 2008 to 2012 on their share prices around the announcement date. The paper
contributes to the literature by analysing the market reaction to share buyback announcement, by applying the
market model not used so far in the Indian studies and by undertaking a rigorous analysis of share repurchase.
Though share repurchase has not come up yet as a regular or useful practice by Indian companies like those in
US or Canada, our analysis does throw some light on the issue with interesting findings. First, unlike the US
market, the trend in average additional return does not support any motive like undervaluation or maximizing
shareholders’ value. Second, the cumulative abnormal returns also do not reveal any increase in share price of
the company after the repurchase announcement. Third, the sample shows that more of small and unknown
companies go for share buybacks compared to known or large companies. Fourth, most importantly, the average
abnormal returns are not statistically different from zero in most of the cases both in pre and post announcement
period, implying that this corporate activity does not carry much information to the investors, possibly because
of the ownership structure of Indian companies being majority owned or otherwise controlled by promoters. The
lesson for the company is that it cannot revive the share prices through repurchase announcements in India. The
implication for the regulator might be to check the real motives of such buybacks in India and accordingly
formulate policies.

*Corresponding author. Email id: oparmita@hotmail.com. Address: International Management Institute Kolkata,
2/4C, Judges Court Road, Alipore, Kolkata 700027. Phone No. :+91 33 6652 9667 (O), +91 33 2359 9290 (R),
+91 94331 20454 (C). The authors are indebted to Ms. Rajashri Chatterjee for research assistance.
I. Introduction

The corporate practice of share repurchase was first originated in the US in the late
1960s, and gained immense popularity by mid 1980s. Still today, share buyback is
frequently practised by companies in US, Canada and Australia. Companies repurchase
their own shares with a variety of motives which include returning surplus cash to
shareholders, enhancing earning per share, increasing promoters voting power, warding
off the takeover threats and above all preventing undervaluation of shares in the stock
market.
Share buyback is believed to inject some buoyancy into stock prices as the buyback
price is generally higher than the prevailing market price and has thus been regarded as an
essential measure to ‘rescue a plunging stock market’(Liao, Ke and Yu, 2005). Several
studies based on US and Canadian market find that share buyback announcement
disseminate positive information to the market. Dann (1981), Vermaelen (1981), Netter
and Mitchell (1989) and Ikenberry et al. (1995, 2000) observed significant positive
reaction to the stock repurchases announcements.
India recognized this corporate practice by an Ordinance promulgated on 31st October,
1998 and three separate sections 77A, 77AA and 77B have been added to the existing
Companies Act, 1956. Indian companies are allowed to repurchase shares under the Open
Market method or Tender Offer route. However, unlike US, UK or Canada the number of
buyback has been quite low in India since its inception [Figure 11]. It is only recently that
an upward trend is being noticed.
Given this background, it is pertinent to look at the impact of such buyback of shares
on the stock market return in India. There is virtually no systematic study on this in the
context of the Indian stock market. The objective of this study is to examine whether
share repurchase announcement under open market method has any material impact on
stock returns in India. It examines whether buyback announcements lead to any
significant abnormal returns and also whether the company really benefits by share
buyback.
The remainder of the paper is designed as follows. The review of relevant literature is
presented in Section II. Section III describes data and methodology. Section IV presents
the empirical results and Section V concludes.

1
Based on the sample data from Haw et. al. (2011).
 II. Literature Review
Most of the studies covering various aspects of share buybacks have been conducted in
the developed countries like US, Canada, Australia etc. The studies related to share buyback
focus mainly four aspects: motives behind share repurchase, whether share buyback generates
abnormal returns, the relation between the abnormal return and regulatory framework and
whether share buyback is a substitute of paying dividends or not.
Several studies have examined the underlying motives behind share repurchase
programmes and most common motives identified include returning surplus cash to
shareholders, capital structure adjustment, anti-takeover mechanism, means for transferring
wealth from participating to non-participating shareholders and the application of preferential
tax rates ((Liao, Ke and Yu, 2005). Similar motives have also been reported by Badrinath and
Varaiya (2000). Western and Siu (2002), FEI Report (1999) etc. have also worked on the
motives behind share repurchases. However, it is observed that the predominant motive in
majority of share repurchase is to prevent undervaluation of share prices in the market.
Findings of the studies like Dann (1981), Vermaelen (1984), Netter and Mitchell (1989),
Comment and Jarrell (1991) support the undervaluation hypothesis and observe significant
positive abnormal returns around buyback announcement period in US. Comment and Jarrell
(1991) observe that during the period of announcement, abnormal returns are highest for
tender offers and lowest for open market buybacks, implying thereby that tender offers are
comparatively more informative to the market. The information contained in buyback
announcements is primarily company specific (Hertzel 1991).The theory of undervaluation
has also got support from studies based on US like Ikenberry et al. (1995, 2000) as well as
from Australian studies like Balachandran and Troiano (2000).
However, Eberhart and Siddique (2004) document lack of consistent evidence of
positive long-term abnormal operating performance or stock returns following buyback
announcements and liquidity change is the dominant factor in explaining abnormal stock
returns around buyback announcement. The Liquidity hypothesis is supported by another US
based study by Cook, Krigman and Leach (2004) as well.
The regulatory framework around share repurchase varies across nations and has
significant impact on this corporate practice from different dimensions. Share buyback
announcement during changes in regulatory framework governing buyback is associated with
a positive but statistically insignificant abnormal return performance. This is in contrary to
the evidence of US firms and the researchers have argued that this may be due to the
overregulated environment of buyback in Australia (Harris and Ramsay 1995). Rau and
Vermaelen (2002) find that the form and intensity of repurchase activity in the UK is
influenced by the tax consequences for pension funds. Firms in UK announcing share
buybacks earn smaller excess returns, both in the short- run and in the long-run than those
earned by firms in the US. This is mainly because of the regulatory provisions in the United
Kingdom that makes it less likely that the firms could edge superior information to
repurchase shares under the situation of under valuation of stock prices.
A number of studies examine the issue of whether share buybacks and dividends are
substitute payout methods. De Angelo, De Angelo and Skinner (2000) find that on an average,
firms obtain significant positive abnormal returns of about 1% when they do not change the
practice of regular dividend and paid a positive special dividend and conclude that share
repurchases did not substitute for special dividends. Grullon and Michaely (2000) in their
study on US firms have reported that dividend forecast errors are negatively associated with
share repurchase activity, indicating that the difference between actual and expected dividend
payments tends to become negative as the firm spends more money on share buybacks. This
indicates that share repurchases and dividends are substitutes. Fenn and Liang (2001)
mention that dividends as well as repurchases increase with free cash flows and decline with
external financing costs.

While numerous studies have been conducted on share buybacks in US, UK, Canada
etc., this area has remained almost a virgin area in the Indian context. Surprisingly, there are
very few in-depth studies for share buybacks by the Indian companies. For example,
Chatterjee and Rakshit (2012) observe that contrary to the theoretical hypothesis, the positive
influence of repurchase on share price is not prevalent in all the buyback cases in India. Also,
an empirical analysis of share buybacks for the period from 1998-99 to 2002-03 in India
reveals that the actual buyback price is less than one half of the maximum price in nearly fifty
per cent of the cases analyzed [Gupta et al. (2006)]. It has been observed that buyback
announcements had little or no effect on the share price of rival firms.
It should be noted that India’s buyback regulatory framework is more stringent than
US. Still the existing regulations leave wide scope for malpractices. In India, The Tender
Offer Method is absolutely fair and transparent compared to Open Market Method from
shareholders’ perspective [Chatterjee and Rakshit, (2009)]. Because of the loopholes in the
existing legal framework, many undesirable practices around share repurchase are being
observed in India and consequently, the regulator, Securities and Exchange Board of India
(SEBI) is currently proposing to revisit the existing buyback regulatory framework 2.

As it is evident from the existing literature, there are lot of issues that can be studied
on share repurchase activity in India and its implications for the corporate and the market at
large. This paper is expected to fill up at least a part of this gap by contributing to the existing
literature with main focus on the price behaviour around stock repurchase announcement.

III. Data and Methodology

Indian stock market is largely represented by Bombay Stock Exchange (BSE). The
data in the present study also relates to BSE. The study covers the period from July 2008 to
July 2012. It considers all the share buyback announcements through open market method
during this period. A criterion was used to select the companies. The companies must be
listed on BSE. A total of 63 buyback announcements are taken into consideration. The period
of analysis extends from previous 30 to post trading 30 days with respect to the
announcement date. The data on market return is based on Sensex, which is sourced from
BSE website. The information on buyback announcements are collected from SEBI website.
The summary statistics related to the share buyback is presented in Table 1.
Table 1 shows that 2011 had the highest number of buybacks. The motive of buyback
is predominantly maximizing shareholders’ value. The amount of share buyback as
percentage of paid-up capital and free reserve ranges between 6% and 25%. Average buyback
size shows a mild declining trend in last three years. It should also be noted that there is no
pattern regarding the size of the companies going for buybacks; there are small, mid and large
cap companies that have opted for share buyback.
In order to find out whether any abnormal return is generated around the buyback
announcement, this study employs the standard event methodology based on ordinary least
squares market model3.
In a Market Model, under the assumption that asset returns are jointly multivariate
normal and independently and identically distributed through time, the model is correctly
specified. The market model provides a linear relationship between the individual stock
return and the market return that follows from joint normality.

2
Discussion paper on 'Proposed modifications to the existing framework for buy back through open market
purchase' 2013 (See for details).
3
For details on market model refer to Campbell, Lo and MacKinlay (1997).
 ( )
( ) ( )
Rit = return on stock i and Rmt = market return
The equation is estimated using the estimation window which is shown as follows:

T0 + 1 T1 T2
Here, is the event date; T0+1 to T1 is the estimation window and T1 to T2 is the
event window. From equation 1, are estimated by running OLS on the data in
estimation window. Then using these estimates, abnormal returns for security I at time t in
the event window is computed as:
̂ ̂ ( )
Subsequently, AARs and CARs are calculated based on these abnormal returns.
In the market model, by regressing the firm’s stock return on market return, the
expected return is estimated. Then, the abnormal return is calculated as the difference
between this expected return and the actual return. For applying market model to estimate the
abnormal returns, the regression was estimated based on the data of firm and market return of
previous 60 trading days. Hence, here the estimation window consists of 60 observations.
Then using this, the expected returns were generated and then the abnormal returns are
calculated for the event window, 30 days prior to the event date and 30 days post the event
date. Here the event date is the announcement date. All the series are tested for stationarity
using Phillips-Peron unit root test before starting the analysis. As expected both the returns
are stationary.
The analysis is done in two ways. First, by the daily abnormal returns, we try to
measure the effect of the buyback announcement around the announcement date. For this, the
daily average abnormal returns (AARs) for all stock repurchase announcements are
calculated over -30 and +30 trading days with the announcement date 0. For each of the days
prior and post announcement, the hypothesis that return is significantly different from zero
has been tested. Apart from that, the cumulative abnormal returns (CARs) are also computed
over different ranges. Second, price behaviour is also investigated for different categories
like the size of the company, size of the buyback and the type of the industry the firm is in. It
is quite possible that the significance of abnormal return around buyback announcement may
vary with the company size or the size of the buyback or across the industries. Hence the
hypothesis that there is difference in abnormal returns between the categories based on these
three criteria is also tested. For size, companies are categorized according to the size of
market capitalization. If market capitalization of the company at the time of buyback
announcement is above Rs. 10,000 crore, we call the company as large-cap, if it is between
Rs. 2,000 to 10,000 crore, we call it as mid-cap and if the market capitalization falls below
2,000 crore, we call it small-cap.

IV. Results
The daily abnormal returns for all 14 days prior and post announcement day are
reported in Table 2. Table 2 shows that before and after the announcement date there is not
much change in the average abnormal return which predominantly remains negative and
insignificant. However, the t-statistic that tests the hypothesis whether average returns are
equal to zero or not indicate that before the announcement, on days 2,5,9 and 11, returns are
negatively significant. But, after announcement, return still is negative and significant only
on days 4, 10, 12 and 14. This pattern does not speak about existence of significant abnormal
return around share repurchase announcement in the Indian market.
Table 3 presents the CARs which indicate that both in pre and post announcement
period, returns are negative. But, it should be noted that, before the announcement, returns
are insignificant, but after announcement the negative returns are significant for post 3 and 14
days. This implies that the buyback for undervaluation is not at all relevant in the Indian
stock market. It is also quite surprising that the objective of maximizing shareholders’ value
is also not achieved.
Figures 2.1 and 2.2 present the AARs and CARs and clearly point out that the
abnormal returns are negative; for AARs, post announcement the extent of such negative
returns on an average is less. This is also supported by the AARs for pre and post 30 days as
shown in Table 4. However, the two-sample paired t-test for pre and post 3-days, 7-days and
30-days show that returns are not significantly different (Table 4). CARs also show that 30
days prior and post announcement, the returns go back at more or less the same negative
levels.
Next, we test whether the average abnormal returns are significant in pre and post 7
and 30 days of the buyback announcement for large-cap, mid-cap and small-cap companies
separately. There are 4 large-cap, 18 mid-cap and 41 small-cap companies. Figure 3 presents
a graphical overview of the AARs; this shows that the volatility of AARs varies directly with
size. Now, the results of paired t-test for testing whether the pre 30 days (10 days) and post
30 days (10 days) AARs are same or not for each individual categories are presented in Table
5. The results indicate that there is no significant difference in AARs for pre and post
announcement periods for large and small-cap companies, but the AARs for post
announcement is significantly different from pre-announcement AARs for mid-cap
companies. It should also be noted that for large and small cap companies, the AARs post
announcement are less compared to that of pre-announcement, but for mid-cap companies,
the post announcement AARs have shown some increase (though still negative) compared to
the pre-announcement period.
The next analysis examines whether the AARs vary if the companies’ size of buyback
is different. If share buyback amount as percentage of paid up capital and free reserve is
within 10%, we categorize that buyback as small(S) and if it exceeds 10%, we call it big (B).
Based on this categorization, 14 buybacks are big and rests are small. Figure 4 shows there is
not much difference in the pattern of negative AARs before and after announcement across
the buyback categories. The paired t test shows no difference before and after announcement
for either of the categories (Table 6, panel1).
Table 6, panel 2 provides the results of the difference between means test for
companies falling under different industry categories. There are two categories, viz. service
and non-service sector companies. The service sector companies include those in software,
electricity generation, media, transport and logistics, business consultancy, securities broking,
other financial services etc. and there are 39 companies in this category. Non service
organizations include those in other sectors (24 companies). The t statistic reveals there is no
significant difference between the AARs before and after announcement. But Figure 5 clearly
shows that for service companies the negative AARs are less compared to that of the non-
service companies.

V Conclusion
This paper examines the effect of announcement of share buyback by the Indian
companies during 2008 to 2012 on the share price around the announcement date. The paper
contributes to the literature by applying the market model, not used so far in the Indian
context. India, being a developing economy, has faced this phenomenon only recently and
this has not come up yet as a regular or useful practice by Indian companies. Still the analysis
done here throws some light on the issue as it has come up with interesting observations. First,
unlike the US market, the trend in average additional return does not support any motive like
undervaluation or maximizing shareholders’ value. The negative returns persist before and
after the share repurchase announcement. Second, the cumulative abnormal returns also do
not reveal any benefit in terms of the share price of the company after the announcement.
Third, the sample shows that more of small and unknown companies go for share buybacks
compared to known or large companies. Fourth, most importantly, the average abnormal
returns are not statistically different from zero in most of the cases both in pre and post
announcement period, implying that this corporate activity does not carry much information
to the investors. This is possibly because of the ownership structure of Indian business houses
that is distinctively different from those in U.S. Indian companies are majority owned or
otherwise controlled by founding families (known as promoters) unlike the U.S model of
widespread equity ownership. Moreover, in India promoters are not allowed to offer their
shares for repurchase under the Open Market method.
The paper has some implications for the company and the regulator. Given the results,
one might wonder why companies still go for share buybacks. The lesson for the company is
that it cannot revive the share prices through repurchase announcements in India as investors
are indifferent to such announcements. The implication for the regulator might be to check
the real motives of such buybacks in India and accordingly formulate policies. It should be
noted that apart from the objectives declared by the company, there might be some other
unspoken reasons behind it. For example, the companies may go for share buybacks for
avoiding a possible takeover threat or to raise the promoters’ share. Whether this exactly has
happened in such cases, needs to be investigated further.
References

Badrinath, S.G., Varaiya, N.P. and Ferling, R.L. (2000): To buy or not to buy? Financial
Executive May.

Balachandran, B. and Troiano, R. (2000) On market share buybacks and earnings: Australian
evidence, The 9th Conference on the Theories and Practices of Securities and Financial
Markets, National Sun Yat-sen University, Kaohsiung, Taiwan.

Campbell, John Y., Andrew W. Lo, and A. Craig MacKinlay. 1997. The Econometrics of
Financial Markets. Princeton: Princeton University Press, Chapter 4

Chatterjee, C and Rakshit, D (2008) Share Buy-back Regulations in India: A Critical

Analysis, The Chartered Accountant, Vol. 57, No. 05, Pp. 863-865.

Chatterjee, C and Rakshit, D (2012), An Empirical Investigation of Share Repurchases in

India, South Asian Academic Research Journal, January 2012, Vol.2, Issue 1, Pp.28-65.

Comment, R. and Jarrell, G. A. (1991) The relative signalling power of Dutch-auction and
fixed-price self-tender offers and open-market share repurchases, Journal of Finance, 46,
1243–71.

Cook, D, O., Krigman, L and Leach, J, C (2004) On the Timing and Execution of Open
Market Repurchases, Review of Financial Studies, 17, Pp.113-138.

Dann, L. Y. (1981) Common stock repurchases: an analysis of returns to bondholders and

stockholders, Journal of Financial Economics, 9(2), 113–38.

De Angelo, De Angelo and Skinner (2000): Special dividends and the evolution of dividend
signalling, Journal of Financial Economics, Vol. 57, Issue 3, Pp. 309-354.

Eberhart, A.C and Siddique, A.R (2004) Why are Stock Buy Back Announcements Good
News, working papers at NBER.

FEI (1999): FEI Members Expect Share Buyback Activity to Remain Strong, Financial
Executive; May/Jun99, Vol. 15 Issue 3, p58.
Fenn, G. W and Liang, N (2001): Corporate payout policy and managerial stock incentives,
Journal of Financial Economics 60 (2001) 45-72.

Grullon, Gand; Michaely (2002) Dividends, Share Repurchases, and the Substitution
Hypothesis, NBER working paper.

Gupta, L.C., Jain, N., Kumar, A (2007): Indian Share Buyback Practices & Their Regulations:
Effect on Share Prices, Dividends and Corporate Finance, SCMRD, New Delhi.

Harris, T; Ramsay, I.M. (1995) An empirical Investigation of Australian share buybacks,

Australian Journal of corporate Law, PP 393 –416.

Haw In-Mu, Simon S.M. Ho, Bingbing Hu, Xu Zhang (2011), The contribution of stock
repurchases to the value of the firm and cash holdings around the world, Journal of
Corporate Finance, 17, pp. 152 – 166, Elsevier.

Hertzel, M.G. (1991) The Effects of Stock Repurchases on Rival Companies, Journal of
Finance P. 707.

Ikenberry, D., Lakonishok, J. and Vermaelen, T. (1995) Market underreaction to open market
share repurchases, Journal of Financial Economics, 39, 181–208.

Ikenberry, D., Lakonishok, J. and Vermaelen, T. (2000) Stock repurchases in Canada:

performance and strategic trading, Journal of Finance, 55, 2373–97.

Liao, T. L, Ke, M. C, Yu, H. T( 2005) Anomalous price behaviour around stock repurchases
on the Taiwan Stock Exchange, Applied Economics Letters, 2005, 12, 29–39.

Netter, J. M. and Mitchell, M. L. (1989) Stock repurchase announcements and insider

transactions after the October 1987 stock market crash, Financial Management, 18(3), 84–96.

Vermaelen, T. (1981) Common stock repurchases and market signaling: an empirical study,
Journal of Financial Economics, 9(2), 139–83.
Vermaelen, T. (1984) Repurchase tender offers, signaling, and managerial incentives,
Journal of Financial and Quantitative Analysis, 19(2), 163–81.

Western, J.F., and Siu, J.A. (2002) Changing motives for share repurchases, Anderson
Graduate School of Management, University of California, Los Angeles (UCLA), Working
papers 3-03 at www.anderson.uda.edu.
 TABLE 1: Summary Information for Stock Repurchase Programmes
Average
Market
No. of Shares Buyback as Buyback size
Year Motives Announced Type of Industry Capitalization(Rs.
Buyback % of PCFR* Announced
million)
(Rs. Mln)
msv uv usc nm Service Non Service Mean Median
2008 13 6% - 25% 9 1 0 3 1620.52 4 9 59270.6 8512.4
2009 15 9.7% - 25% 11 0 0 4 362.27 5 10 5115.7 1447.7
2010 8 9.97% - 25% 8 0 0 0 1643.90 3 5 87567.3 18136.6
2011 20 6.45%- less than 25% 13 0 1 6 1438.80 8 12 26533.9 9914.7
2012 7 6.36% - 10% 6 0 0 1 1204.81 4 3 14477.7 7586.3
TOTAL 63 6% to 25% 47 1 1 14 24 39

ms v: ma xi mi s e s ha rehol der va l ue uv: underva l ua tion us c: us e s urpl us ca s h nm: nothi ng mentioned

*PCFR: Pa i d-up Ca pi tal a nd Free Res erve
 TABLE 2: Daily AARs around
the Announcement Day
Event Days AARs (%) t-value
-14 0.24 1.05
-13 -0.31 -1.11
-12 -0.24 -1.02
-11 -0.75 -3.12*
-10 0.29 1.22
-9 -0.36 -1.39**
-8 -0.02 -0.10
-7 -0.01 -0.04
-6 0.09 0.42
-5 -0.31 -1.59**
-4 -0.14 -0.78
-3 -0.21 -0.93
-2 -0.39 -1.70*
-1 -0.17 -0.70
0 0.15 0.89
1 -0.30 -1.21
2 -0.25 -1.22
3 -0.24 -0.95
4 -0.25 -1.33**
5 -0.26 -1.21
6 -0.29 -0.95
7 0.22 0.82
8 -0.24 -1.24
9 0.07 0.30
10 -0.34 -1.81*
11 -0.28 -0.74
12 -0.29 -1.32**
13 -0.12 -0.45
14 -0.58 -2.48*
* At 5% l evel of s i gni fi ca nce
** At 10% l evel of s i gni fi ca nce
 TABLE 3: Cumulative Abnormal Returns
Around the Announcement Day
Windows CARs (%) t-value
Pre-Post Combined
(-1, +1) -0.32 -0.80
(-2, +2) -0.96 -1.57
(-3, +3) -1.56 -1.67*
(-4, +4) -1.81 -1.76*
(-5, +5) -2.39 -1.92*
(-7, +7) -2.37 -1.60
(-10, +10) -2.96 -1.46
(-15, +15) -5.74 -1.73*
(-20, +20) -6.20 -1.47
(-30, +30) -10.80 -1.79*
Pre Announcement
Prior 21 -3.18 -1.38
Prior 14 -2.30 -1.42
Prior 7 -1.15 -1.41
Prior 3 -0.78 -1.49
Post Announcement
Post 3 -0.79 -1.68*
Post 7 -1.37 -1.62
Post 14 -3.14 -1.97*
Post 21 -2.88 -1.34
* At 5% l evel of s i gni fi ca nce

TABLE 4: Difference between Pre and Post

Announcement AARs
AAR AAR AAR
Pre-30 -0.21 Pre-7 -0.16 Pre-3 -0.260
Post-30 -0.16 Post-7 -0.20 Post-3 -0.263
t statistic -0.92 t statistic 0.28 t statistic 0.02
t Critical -1.67 t Critical 1.67 t Critical 1.67
 TABLE 5: Testing for Difference between Pre
and Post Announcement AARs
Based on Company Size
LARGE CAP MID CAP SMALL CAP
Pre 30 -0.26 -0.55 -0.05
Post 30 -0.55 -0.35 -0.04
t stat 1.19 -2.16* -0.20
t critical* 2.35 -1.74 -1.68

Pre 7 -0.31 -0.35 -0.07

Post 7 -0.61 -0.07 -0.21
t stat 0.66 -1.69 1.00
t critical* 2.35 -1.74 1.68
*a t 5% l evel of s i gni fi ca nce

TABLE 6: Testing for Difference

between Pre and Post Announcement
AARs
PANEL 1: Share Buyback Size
BIG SMALL
Pre 10 0.02 -0.17
Post 10 -0.10 -0.21
t stat 0.88 0.43
t critical* 1.77 1.68
PANEL 2: Industry Type
SERVICE NON-SERVICE
Pre 10 -0.27 -0.03
Post 10 -0.48 -0.01
t stat 1.49 -0.24
t critical* 1.71 1.69
*a t 5% l evel of s i gni fi ca nce
 Figure 1: An Overview on the Number of Buybacks during 1998 to 2004

2344
2500
Mean no. of firms per year
2000
Mean no. of repurchase firms per year

1415
1500

1058
732
1000

582

333

299

267
244

244

239

233

500

185
131

121
121

65
62
48

44

29
25
23

21

12
10
0

Mexico
Malaysia

Singapore

UK

US
Australia

Philippines
Korea S

Taiwan
Canada

Hong kong

Japan
India

Source: Based on sample data from Haw et. al (2011)

Figure 2.1: AAR

0.4

0.2

0
-8
-6
-4
-2
-30
-28
-26
-24
-22
-20
-18
-16
-14
-12
-10

0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
-0.2 30

-0.4

-0.6

-0.8

-1

0.5
Figure 2.2: CAR
0
-21 -14 -7 -3 0 3 7 14 21
-0.5

-1

-1.5

-2

-2.5

-3

-3.5
 4
Figure 3: AARs of Large, Medium and Small Cap Companies
3

-1

-2

-3

-4 L M S

-5
-30 -27 -24 -21 -18 -15 -12 -9 -6 -3 0 3 6 9 12 15 18 21 24 27 30

2
Figure 4: AARs of Big ans Small Buyback Companies
1.5

0.5

-0.5

-1
Big Small
-1.5
-30 -27 -24 -21 -18 -15 -12 -9 -6 -3 0 3 6 9 12 15 18 21 24 27 30

1
Figure 5: AARs of Service ans NonService Companies
0.5

-0.5

-1

-1.5 NS S

-2
-30 -27 -24 -21 -18 -15 -12 -9 -6 -3 0 3 6 9 12 15 18 21 24 27 30