INVESTMENT DECISIONS: STOCK BUYBACKS OR STOCK PRICES?

Corporations most frequently repurchase their own shares in order to decrease equity. Share buyback is a conventional mean to return something extra to stockholders without increasing the dividend requirements. The investors mostly focus on the volatility of the stock prices instead of company '...

Full description

Saved in:
Bibliographic Details
Published inJournal of Business Strategies (Karachi) Vol. 10; no. 2; p. 51
Main Authors Ahmad, Basheer, Anees, Mahroona
Format Journal Article
LanguageEnglish
Published Karachi Knowledge Bylanes 31.12.2016
AsiaNet Pakistan (Pvt) Ltd
Subjects
Computer industry
Dividends
Earnings per share
Equity
Initial public offerings
Multinational corporations
Securities buybacks
Software industry
Stock exchanges
Stock prices
Stockholders
United States
Online AccessGet full text

Cover

More Information
Summary:Corporations most frequently repurchase their own shares in order to decrease equity. Share buyback is a conventional mean to return something extra to stockholders without increasing the dividend requirements. The investors mostly focus on the volatility of the stock prices instead of company 's buyback behavior. The purpose of the study is to highlight the two-way relation between share buybacks and share prices. The sample includes 10 multinational companies. The financial data include 10 years share buybacks and share prices ranging from 2002 to 2012. General Linear Model (GLM) is used to explore the two-way impact between share buybacks and share prices and the panel effect of company and month on both. The results show that stock prices and buybacks are interdependent and buybacks and prices behavior is significant across the month through the year while share buybacks behavior is found different across the companies. Microsoft, P &G and IBM are inclined towards high buybacks while Honda and Toyota are inclined to low buybacks. Mid of each quarter is important to focus regarding buybacks and end of the quarter is important to focus regarding the share prices. First half of the year is ideal for stock purchasing while second half of the year is ideal for selling.
ISSN:1993-5765
1993-5765