An Event Study on the Response of Stock Returns to Repurchase of Stock News
DOI:
https://doi.org/10.58661/ijsse.v3i3.173Keywords:
Stock Repurchase, stock returns, Cumulative abnormal returnAbstract
This study investigates how stock returns respond to news of stock repurchases. The objective is
to ascertain market reaction and pricing adjustment (response) to the announcement of stock
repurchase at Pakistan Stock exchange. As chosen by many researchers in this field, an estimation
period of 120 days and a test period of 11 days has been selected, daily price data from seven
businesses (listed on the PSX) that announced stock repurchases between May 2022 and February
2023 along with corresponding PSX index values were used. Utilizing the data from the estimation
period and using OLS (ordinary least squares) market model, normal(Expected) returns were
derived. The null hypothesis “Stock repurchase does not have any relationship with abnormal
return is rejected, as a result of the test statistics showing a significant relationship between event
stock repurchases and abnormal returns.
