Short-Term Return Impact of Share Repurchase Announcements

Abstract

Share repurchase transactions are seen as a corporate financing tool that plays a substantial role in the distribution of idle cash within the company, and are often considered as an alternative to cash dividend payments. The purpose of this study is to determine the effect of the share repurchase programs announcements on stock returns in Turkey stock market. In this study focused on, the effect of the 146 announcements on the stock returns of the companies that are traded in Borsa Istanbul between the years 2010-2018 which initiated share repurchase programs was examined by the event study method. As the conclusion of the study, it was determined that share repurchase announcements produced statistically significant cumulative abnormal returns before and after the announcement date. Also, considering CAAR values calculated in the realization of the share repurchase announcements result in international markets, the impact on stock returns of the share repurchase announcements  in Turkey, compared to many other countries, were found to be suggestively higher.

Keywords: Share Repurchase, Stock Returns, Abnormal Return, Cumulative Abnormal Return, Event Study.

DOI: 10.7176/RJFA/10-12-03

Publication date:June 30^th 2019