Impact of corporate governance and traditional motivations on share buyback decision: a Tobit regression approach

Share buyback has become a buzz in the recent corporate world. Numerous research around the world documented a variety of reasons for share buyback. The current research will extend prior research in the area of share buyback by considering the corporate governance characteristics with the traditional motives of buyback. The present paper covers the share buyback activity in India from the financial year 2016 to 2023. The final sample comprises 324 non-financial firms, listed in either the Bombay Stock Exchange or National Stock Exchange. The current study has employed Tobit regression model to ascertain the factor affecting the buyback decision. The findings re-affirm the significance of the undervaluation of the firm and information asymmetry as key determinants of share buyback decisions. Further, results provide strong empirical evidence that board characteristics have an impact on the share buyback decision. Furthermore, the present study captured the significant impact of the COVID-19 crisis on buyback activity. Moreover, the study reported that drivers of share buyback vary according to the type of share repurchase.