Returns given by firms going for buybacks

What is it about?

Share buybacks or repurchases refer to the process of a firm buying back its own shares from its shareholders. It is said that buybacks indicate that promoters of the firm are having confidence in the future growth of the firm. This means it makes sense to buy shares of these firms. This paper tries to find out what has been the returns given by firms that went for buybacks in India.

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Why is it important?

The findings of the study show that buyback firms have given higher returns than the indices such as Sensex and the BSE 500. The investors and the portfolio managers may make gains by including the buyback firms in their portfolios.