Digest Finance
 

The practice of Russian companies' repurchase of shares

Vol. 24, Iss. 3, SEPTEMBER 2019

Received: 26 September 2016

Received in revised form: 11 October 2016

Accepted: 26 October 2016

Available online: 30 September 2019

Subject Heading: SECURITIES AND FINANCIAL MARKETS

JEL Classification: G14, G32

Pages: 349–364

https://doi.org/10.24891/df.24.3.349

Zadorozhnaya A.N. Moscow State University of Railway Engineering (MIIT), Moscow, Russian Federation
anna_zador@mail.ru

ORCID id: not available

Subject The research examines buyback transactions as a tool of the corporate financial policy.
Objectives The research reviews the efficiency of repurchase programs so to increase corporate capitalization. When the company announces about a repurchase program for buying its own shares back, it has a positive effect on changes in quotations. The hypothesis was tested during the crisis and relatively stable situation in the stock market.
Methods I examined how the company's announcement about the buyback transaction would influence quotations for shares, using a sample of 30 Russian companies, which had closed repurchase deals from 2006 through 2016. I applied the event study method.
Conclusions and Relevance The findings verify that buyback programs are effective, increasing the corporate capitalization. However, this direction should not be a single mechanism, since it has a short-term effect only and deteriorates a dropping trend. In crises, it would be more reasonable to repurchase own shares.

Keywords: repurchase, shares, excess return, event study

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