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You searched Library Catalogue - Publisher: OAK Publication,
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Call Number (WOU)
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SP CEMBA 2011 68
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Author
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Fun, Mun Hin
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Title
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Share price behaviour around share repurchase / Fun Mun Hin
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Abstract
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This study revolves around the need to understand the relationship between share
repurchase and share price behaviour with empirical justifications on companies
listed on Bursa Malaysia. Share repurchase a few decades ago is different from what
it is today. Started off in the West, it reached maturity in the 1980s in the United
States but it only began in Malaysia in the 1990s. Only in the new millennium did
share repurchase gain popularity on the local front and the recent few years
exhibited high numbers of share repurchase announcements. Companies pursue
share repurchase for a number of reasons, mainly to signal undervaluation, to reward
shareholders, to defend against takeovers, to utilize financial resources efficiently
and many more. Consequences of share buybacks announcements are positive
abnormal returns as documented by various scholars. Theories that bridge the gap
between share repurchase and share price were also discussed. Three main theories
were presented; the behavioural - agency theory, the Efficient Market Hypothesis
and behavioural finance. These models provide the underlying fundamentals for
share price reaction to the buyback announcements. A total of 99 share buyback
announcements from 36 companies made up the samples.
Event study was used as a framework where daily closing share prices from the
estimation window, event window and post-event window for those companies were
calculated for abnormal returns using the OLS market model and analyzed via the
average abnormal returns and cumulative average abnormal returns. Subsequently,
the obtained results were assessed with a T test and a generalized sign test. It is
found that share repurchase announcements created positive reactions by driving up
share prices. Significant abnormal returns occur within the event window and that it
takes about fifteen days to twenty three days for the abnormal returns to be reflected
into the share price. For future research, some relevant and crucial possibilities are
investigating share repurchase motives, expanding sample size and utilizing longer
study period, use multiple event windows and examine for a better research
methodology in the Malaysian context.
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Notes
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Final project report submitted in partial fulfilment of the requirements for the Degree of Master of Business Administration (CeMBA)
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Publisher/Year
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Penang : School of Business and Administration, Wawasan Open University, 2011
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Physical Description
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102 p.; 30 cm.
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Subject
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Wawasan Open University -- Dissertations
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Subject
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Stock repurchasing -- Malaysia
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