A Report on Stock Price Reactions to Share Buyback Announcements in Companies

Share buybacks have become an increasingly popular corporate strategy for distributing surplus cash and signaling managerial confidence. However, empirical evidence on their effectiveness in enhancing shareholder value remains mixed, particularly in emerging markets like India. This study examines the impact of share buyback announcements on stock prices of selected Nifty 50 companies over the period 2019–2024. Using Event Study Methodology, daily stock prices were analyzed for a six-month window before and after buyback announcements. A paired sample t-test was employed to evaluate whether buyback announcements led to statistically significant changes in stock prices. The sample includes 21 buyback events executed through both tender offer and open market routes. The findings reveal that while most buyback announcements resulted in statistically significant price movements, the direction of impact was predominantly negative. Tender offers generally produced stronger market reactions than open market repurchases. A comparative analysis of pre- and post-COVID periods further indicates a more adverse investor response in the post-pandemic phase. The study concludes that share buybacks do not uniformly enhance shareholder value and that market reactions depend on execution method, timing, and broader economic conditions.