Muñoz, Jr., José E (2017) An Alternative Explanation for Stock Price Increases Among the S&P 500 Following a Stock Buyback Announcement. In: 2nd International Research Conference on Economics Business and Social Sciences, 11-12 July 2017, Park Royal Hotel Penang Malaysia..

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Abstract

Objective: The purpose of this paper is to investigate an alternative, more basic explanation for stock price increases among the Standard & Poor’s 500 Index following a stock buyback announcement than the signaling theory offered in current literature.Methodology: Three related sets of data were collected and analyzed for 1,858 individual S&P 500 stock buyback announcements occurring during the period 2005-2015: First, the actual stock prices for 6 different times from the buyback announcement date (t) to one year after (t+365); second, the S&P 500 Index for the same dates; and third, the mathematical price of the stock resulting from the reduction in buyback shares.Results: The results demonstrate that the greatest contributor to the post-buyback-announcement share price increase is due to the mathematical reduction in shares occurring from the buyback. Implication: This research presents a conceptually yet empirically supported framework to describe the significance of the mathematical reduction in shares as a contributing factor in the post-buyback-announcement share price increase as compared to alternatives offered in the current literature.This paper is particularly useful for those who study stock market behavior and the causes of the share price increase that follow a stock buyback announcement.

Item Type:	Conference or Workshop Item (Paper)
Additional Information:	ISSN-2523-1537 Cover and Layout: Sobia Nasir, Center for Sustainability Research and Consultancy Distributed by: School of Economics, Bahauddin Zakariya University Multan Pakistan (www.bzu.edu.pk) Center for Sustainability Research and Consultancy (www.globalcsrc.org) School of Economics Finance and Banking, Universiti Utara Malaysia (www.sefb.uum.edu.my)
Uncontrolled Keywords:	Stock buybacks, repurchases, signaling, S&P 500
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions:	School of Business Management
Depositing User:	Mrs. Norazmilah Yaakub
Date Deposited:	26 Sep 2018 01:43
Last Modified:	26 Sep 2018 01:43
URI:	https://repo.uum.edu.my/id/eprint/24816

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