ABSTRACT

The objective of the paper is to examine whether buyback announcement increases earnings per share and stock price to create the value for the shareholders. The sample size of the paper consists of 71 and 62 initial buyback programs of listed companies for earnings per share and stock price analyses respectively announced during the period from 1998 to 2013. The earnings per share and stock price are compared for consecutive two years both before and after the announcement of buyback A large sample t – test has been conducted to test whether increase and decrease in the EPS and the stock price are statistically significant. The paper finds that the announcement of stock buyback signals increase in the earnings per share and stock price.

Keywords: EPS, t-test, buyback, shareholders, Corporate Value