STOCK REPURCHASES AND MANAGERIAL TIMING ABILITY: EVIDENCES FROM INDIAN STOCK MARKET

Poonam Rani, Dr. Pradeep Kumar Aggarwal

Abstract


In the recent period, we have seen tremendous growth in stock repurchase activities in India. During the year 2018, 66 companies announced buyback of their stocks, which is almost 20% jump when compared to the year 2017. The basic concept is that a company repurchases its stocks from the market, while the stockholders receive cash and the number of outstanding stocks decreases. Most of the studies have based on stock price and liquidity impact but very few work has been done on managerial timing ability in respect of stock repurchases. Hence, the present study is an attempt to test the managerial timing ability in India with respect to 27 stocks repurchase announcements made by bluechip companies listed on S&P BSE SENSEX 100 for the period of 2016 to 2019. The paper provides no evidence of managerial timing ability for selected sample companies. Further, the findings are more consistent with the distribution of free cash flow rather than undervaluation of stocks.


Keywords


stock repurchases, managerial timing ability, bluechip companies, free cash flow and Undervaluation

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